PSDP ALLOCATION IN BUDGET 2008-09

SHAMIM AHMED RIZVI
June 23 - 29, 2008

Highest ever amount of over Rs 567 billion including foreign exchange component equivalent to Rs76 billion has been provided for Public Sector Development Programme (PSDP) in the budget 2008-09 being debated in the National Assembly and the senate these days.

It compares to Rs 520 billion provided for the PSDP during the outgoing year which was revised downward by Rs 54 billion during the third quarter (January March 2007) of the out going financial year.

The National Economic Council (NEC), in its meeting held on June 2, 2008, approved the Public Sector Development Programme (PSDP) 2008-09 at the Size of Rs 541 billion based on recommendations of the Annual Plan Coordination Committee (APCC) which met on 23-24 May, 2008. Federal PSDP is for Rs 371 billion while Rs 170 billion is earmarked for the Provinces to be spent through their Annual Development Programmes (ADPs). In addition, for Reconstruction and Rehabilitation of Earthquake affected areas, an amount of Rs 26 billion has been allocated. Thus, the overall size of PSDP for 2008-09 stands at 567 billion

According to the Sectary of the Planning Commission, the PSDP 2008-09 marks a shift in the government's development strategy with emphasis on pro-poor, equitable and sustainable economic growth. It will facilitate the private sector to invest by creating an enabling environment and shall promote a knowledge based economy through the development of appropriate human and physical infrastructure.

In order to provide relief to the poor and achieve MDGs, the largest ever allocation of 51% of the federal PSDP has been made for social sectors, 44% for development of physical infrastructure, and 5% for other sectors. A major initiative in the infrastructure sector is to build small and large hydro power projects and dams to overcome energy crisis. To create employment opportunities and to improve the living standard of low income segments of the society, various new programmes and projects like "Prime Minister's Pro-Poor Income Support Programme", a revolving fund "Housing for all" for government servants and the general public, Prime Minster's special initiatives for white revolution, village product specialization and expansion & rehabilitation of Basic Health Units (BHUs) along with doubling the number of Lady Health Workers from 100,000 to 200,000 have been launched during 2008-09. Similarly, to improve and modernize functioning of public sector institutions, major initiatives like paperless governance and video conferencing facilities at Federal Secretariat and provincial headquarters are being undertaken during 2008-09. Adequate funds have been provided for "Hunarmand Pakistan Programme" to ensure skilled and trained manpower to cater to growing needs of industry at home and abroad. Despite slow down in the economy during 2007-08 owing to unprecedented rise in oil prices in the international market and high food inflation, the size of the federal PSDP 2008-09 has grown 11% over 2007-08. The Provincial Development Programmes have also been increased to Rs 170 billion from Rs 150 billion last year.

Following is the Ministry and Division-wise Summary of allocations for PSDP proposed in the coming financial year (2008-09) in comparison with the year 2007-08

(Million Rupees)

S.NO

MINISTRY/
DIVISION

ALLOCATION FOR 2007-08

ALLOCATION FOR 2008-09

   

FOREIGN LOAN

RUPEE

Total

Foreign Loan

Rupee

Total

1

2

3

4

5

6

7

8

A. FEDERAL

 

Infrastructure
Development

24308.3

115415.3

139723.6

30414.6

111275.2

141689.8

1

Water & Power
Division (Water Sector)

1275.0

62274.9

63549.9

250.0

62170.0

62420.0

2

Water &Power
Division (Power Sector)

7207.8

13394.5

20602.3

13332.0

825.3

14157.3

3

Pakistan Atomic
Energy Commission

3770.0

8440.3

12210.3

2989.0

12341.9

15330.9

4

Pakistan Nuclear
Regulatory Authority

0.0

421.0

421.0

0.0

457.5

457.5

5

Petroleum & Natural
Resources Division

39.0

889.1

928.1

3.0

847.4

850.4

6

Communications
Division (Including NHA)

8672.5

20940.3

29612.8

10065.6

26756.0

36821.6

7

Ports & Shipping Division

30.0

727.0

757.0

0.0

372.1

372.1

8

Railways Division

3314.0

8328.2

11642.2

3775.0

7505.0

11280.0

 

Social Development

7582.7

161366.9

168949.6

10176.2

187389.7

197565.9

9

Special Programmes

0.0

34420.0

34420.0

0.0

24420.0

24420.0

10

Finance Division

1570.0

15392.9

16962.9

3078.1

47674.4

50752.5

11

Education Division

195.0

6313.8

6508.8

43.9

6225.8

6269.7

12

Higher Education Commission

265.4

17734.6

18000.0

72.3

17927.7

18000.0

13

Health Division

1584.0

12688.7

14272.7

1517.2

17493.2

19010.4

14

Information Technology & Telecommunications Division

0.0

3214.3

3214.3

0.0

1976.0

1976.0

15

Science & Technological
Research Division

189.9

3410.8

3600.7

27.0

2988.4

3015.4

16

Population Welfare Division

204.2

4123.4

4327.6

0.0

4315.0

4315.0

17

Women Development Division

0.0

163.1

163.1

0.0

334.6

334.6

18

Social Welfare & Special
Education Division

0.0

428.4

428.4

0.0

509.5

509.5

19

Labour &Manpower Division

0.0

198.4

198.4

0.0

123.8

123.8

20

Overseas Pakistanis Division

0.0

5.0

5.0

0.0

3.0

3.0

21

KA & NA Division

978.0

12744.1

13722.1

800.0

16815.1

17615.1

22

States & Frontier Regions Division

100.0

7400.0

7500.0

0.0

8662.0

8662.0

23

Environment Division

193.5

1425.3

1618.8

59.0

2193.9

2252.9

24

Local Government &Rural Development Division

0.0

127.9

127.9

0.0

108.1

108.1

25

Culture Division

0.0

378.1

378.1

0.0

413.2

413.2

26

Sports Division

0.0

522.8

522.8

0.0

350.4

350.4

27

Youth Affairs Division

0.0

152.1

152.1

0.0

33.9

33.9

28

Tourism Division

0.0

167.4

167.4

0.0

18.9

18.9

29

Statistics Division

0.0

263.0

263.0

0.0

175.1

175.1

30

Planning and Development Division

513.0

13924.3

14437.3

1186.1

9928.9

11115.0

31

Interior Division

340.0

9171.1

9511.1

0.0

6942.5

6942.5

32

Defence Division

172.0

4962.7

5134.7

927.9

4011.3

4939.2

33

Cabinet Division

0.0

494.8

494.8

0.0

2879.5

2879.5

34

Commerce Division

1.0

1578.0

1579.0

60.0

403.0

463.0

35

Housing & Works Division

0.0

1206.2

1206.2

0.0

4070.1

4070.1

36

Ministry of Foreign Affairs

0.0

579.3

579.3

0.0

407.3

407.3

37

Narcotics Control Division

106.7

170.4

277.1

429.7

338.4

768.0

38

Information &Broadcasting Division

0.0

1537.9

1537.9

0.0

1038.4

1038.4

39

Establishment Division

0.0

503.4

503.4

0.0

292.8

292.8

40

Law. Justice & Human Rights Division

495.0

3526.0

4021.0

350.0

2031.0

2381.0

41

Revenue Division

625.0

1901.8

2526.8

1625.0

745.7

2370.7

42

Defence Production Division

0.0

526.9

526.9

0.0

1450.0

1450.0

43

National Reconstruction Bureau

50.0

0.0

50.0

0.0

76.7

76.7

44

Economic Affairs Division

0.0

10.0

10.0

0.0

12.0

12.0

 

Others

623.3

25703.5

26326.8

700.0

31044.3

31744.3

45

Food, Agriculture & Livestock Division

587.3

15211.9

15799.2

700.0

19815.9

20515.9

46

Industries, production & Special Initiatives Division

36.0

9462.9

9498.9

0.0

10458.8

10458.8

47

Textile Industry Division

0.0

1028.7

1028.7

0.0

769.6

769.6

 

Total (Federal)

32514.3

302485.7

335000.0

41290.8

329709.2

371000.0

B

Provinces

26093.0

123907.0

150000.0

25503.4

144496.6

170000.0

 

Total (PSDP)

58607.3

426392.7

485000.0

66794.2

474205.8

541000.0

C

Earthquake Reconstruction and Rehabilitation Programme

0.0

35000.0

35000.0

10000.0

16719.0

26719.0

 

Grand Total:

58607.3

461392.7

520000.0

76794.2

490924.8

567719.0

The debate on the budget in the NA and the Senate these days is dominated by the opposition with their highly critical speeches. Leader of the opposition in the National Assembly Ch. Pervez Elahi in his opening speech came on hard on the government describing it as "a headless budget". He said the budget 2008-09 was a "negation of the Five Es election manifesto of PPP" and said it would put extra burden on poor masses. Pervaiz Elahi said the budget was eyewash and that it would cost the masses billions of rupees in terms of subsidy withdrawal and increase in General Sales Tax (GST).

He foresaw price hike, rise in unemployment, expensive agricultural inputs, costly flour and other edibles, industrial crunch and fat utility bills and said all this is going to add to masses" hardships. "After Ishaq Dar's resignation, the Finance Ministry went headless and so we could only expect a headless budget," he said.

He bitterly criticized the government for reducing subsidies on wheat, oil and gas, and said the previous government was providing RsI75 billion on subsidies on oil, gas and diesel. "Its reduction would increase the price of diesel and petrol by Rs 10 per litre. Gas bill would swell by 11 percent," he added. He said the reduction in the ongoing subsidy of Rs40billion to Rs20 billion given to KESE, would put negative pressure on the production and transmission capabilities of the company and it would affect the industrial output in Karachi. "The Wapda and gas provider would also enhance the bills and in this way the inflated price of petrol and diesel would create negative impact as a whole," he said. He said that the government has shelved the Kala Bagh Dam (KBD) project but it has no clear policy regarding alternative power projects and the amount of Rs300 million allocated for Bhasha Dam was not enough even for arranging the accommodation of people needed for its construction. He regretted that the poor already groaning will be made to cough up further Rs118 billion after the GST has been increased. He said the PML-Q government was contributing Rsl13.5 billion, for subsidizing electricity but has been reduced to Rs74 billion in this proposed budget. "This reduction in the subsidy would inflate the consumer's bill by more than eleven percent," he added.

He said the government has proposed to raise Rs 25 billion through privatization, but he doubted that in the current political situation no investor would come forward to take part in privatization process. He said the government has also failed to pay dues to independent power producers. He said as a result their production capacity has been reduced and consequently there is more load shedding. "How we would attract new IPPs while existing ones are being treated badly by the government," he stressed.

Debate on budget proposals started in NA within a few hours of mammoth show of strength by the lawyers, civil society and political workers at Parade Avenue in front of the Presidency, and the government faced two-pronged attack. The opposition severely criticized the performance of the government on the economic front while one of the coalition partners of the government for not restoring the judges.

It is commonly believed in the relevant circles that rather relieving the commoners from their hard pressed position under the onslaught of unprecedented price hike, the government in the budget 2008-09 has further taxed the commoners by increasing the general sales tax rate by one per cent across the board. Addressing the post-budget press conference Finance Minister Syed Naveed Qamar admitted that the government's hands were tied and it was unable to protect the public against the energy and food crises in the country. During the launches of the Economic Survey of Pakistan, the Budget Speech, and the post-budget press conference, Finance Minister made it clear that the people should not stay with naive anticipations that the government would protect them against the market economy mechanisms.