Provinces are becoming more assertive in demanding that the bloated role of the federal government in development efforts should be curtailed and have called for reducing the size and the resource allocation for the ‘umbrella projects’’.

At the Annual Plan Coordination Committee (APCC) meeting held on Friday, the bureaucrats who represented all the four provinces Punjab, NWFP, Balochistan and Sindh are reported to have politely questioned the federal justification for proposing huge amounts in the public sector development programme (PSDP) for ‘’umbrella projects’ in almost all sectors.

‘’What’s the wisdom in allocating Rs350 billion for such umbrella projects in the PSDP when the provinces are asked to do the same job in the same sectors with Rs150 billion investment ?” a senior official privy to May 23 meeting confided.

Officials of the Punjab government also reportedly pleaded strongly for giving ‘’more resources and more responsibilities’’ to the provinces.

Now that the district governments are involved in development efforts for building basic health units, primary schools, construction of farm to market roads, water supply schemes, the provinces can do ‘’umbrella job’’ in their respective jurisdiction by bringing about more co-ordination in development efforts in districts.

‘’The federal government in consultation and with active participation of the provincial governments can perform umbrella function for highway-motorway projects, drainage schemes and similar other projects’’, the official said.

‘’It is absolutely not out of box thinking,’’ an official from Quetta responded when asked if Balochistan too wanted more development responsibilities. Interestingly, the federal government is taking up mega projects involving Rs140 billion in Balochistan but the provincial government’s own development plan in 2007-08 was at a mere Rs7 billion which too depended on flow of resources from Islamabad.

Balochistan is now reported to be asking for Rs40 billion plus for development in next fiscal year. Sindh is dropping hints of drawing up a Rs60 billion development outlay for 2008-09 as against Rs50 billion in the current fiscal year. Sindh came under tremendous pressure from Islamabad to cut its development plan. But Islamabad’s advice for a cut remained unheeded in Karachi.

Similarly, in Punjab where a massive development programme of Rs150 billion was taken up in 2007-08 wants to push up its development further. Demands from NWFP for development funds for social and physical infrastructure facilities are also getting louder after the election.

For the last several years, the provinces were asking for a greater role in budget-making, development efforts and an increased share in national resources with, of course, a responsibility in governing and administering their resources, said an official. ‘’But this year, the voices are much louder and their demands are more precise and to the point’’, he added.

Bureaucrats by their training and orientation prefer to remain non- committal when it comes to political issues. But many of them spoke rather candidly in the meeting after having been given a signal by their elected political bosses.

Politicians and bureaucrats also question the size of the federal budget which was Rs1.8 trillion in 2007-08. More than Rs700 billion share of the provinces in national resources is actually not a part of the federal consolidated fund and should not be made a part of the federal budget. The provinces use this fund to run administration and prepare their development programmes. There is a demand to trim down federal budget size to the federal consolidated fund. An overall national financial picture could be presented separately. ‘’You will get to know some idea of future policy direction of budget -making, resources allocation and development programmes on Tuesday (June 3) when the National Economic Council (NEC) meets with the Prime Minister Syed Yusuf Reza Gilani in the chair and the top political leadership from all the provinces is present.

‘’Political leadership will show no inhibition in speaking out plain facts and proposing a change in budgetary directions,’’ the official said but added hastily that there would be no fireworks either as there is a consensus that, ‘’times are difficult, tensions are mounting and any friction and confrontation on any issue, even on resources allocation, has to be avoided’’, he said.

The development part of the budget-making was initiated in the conventional style about two weeks ago. The bureaucrats in the Planning Commission prepared a Rs700 billion plus development outlay. The revenue expenditure and development budget of the next fiscal year is 10 to 15 per cent more to cover up the inflation and includes new demands.

But budget-makers are beset with two big issues this year. Inflation has been exceptionally high. Headline inflation in 2007-08 is anticipated at 11 per cent plus and almost all major budgetary projections of 2007-08 have been knocked out. Already a big cut has been applied on Rs520 billion federal PSDP as the tax collection has fallen below projected Rs1,025 billion to Rs990 billion.

The finance ministry has not only rejected a mega size original PSDP but has also refused to endorse a downward revised development programme.

The bulk of the share of the PSDP prepared by the Planning Commission is allocated for the federal government while a smaller share is proposed for the provinces. The provinces now differ on this issue as the federal government no more provides them with funds, as cash development loans or grants to finance provincial projects.

Well-placed sources say that informal consultations on budget-making are going on. Several teams of think tanks of political parties, retired and serving bureaucrats in Islamabad and provincial capitals are busy exchanging notes on all budgetary and developmental issues.

All these ongoing informal consultations have given some confidence to the officials in provincial capitals and something positive is to emerge at the June 3 NEC meeting. The prime minister is also receiving on Monday (June 2) a detailed presentation on next budget’s taxation strategy and the direct relief measures being proposed.