Published Date: Aug 24, 2011
NO STRONG RELATIONSHIP BETWEEN PSDP, ECONOMIC GROWTH
Dr Vaqar Ahmed, National Institutional Advisor, Planning Commission of Pakistan, has said that there is no strong relationship between Public Sector Development Programme (PSDP) and economic growth observed in Pakistan.
Dr Vaqar was addressing a seminar on Reforms agenda for Public Sector Development Programme in Pakistan organised by Sustainable Development Policy Institute here Monday. Dr Abid Q Suleri, Executive Director, SDPI, was in the chair.
Referring to various studies, Dr Vaqar said that major chunk (57 per cent) of Pakistan s Rs300 billion PSDP is spent on infrastructure and only 42% is invested on the development of social sector. He said that governments efforts to lower fiscal deficit, low and stagnant tax to GDP ratio and rapid growth of current expenditure are major reasons for contraction in PSDP.
He pointed out that for every Rs100 allocated in PSDP, Rs38 do not reach the beneficiaries. He observed that the benefits of PSDP could only reach if approval and implementation processes are put in place through reforming the planning mechanism in the country. He said the reforms agenda may include rationalisation of projects maintaining a priority-based completion criterion, reduction of throw forward through alternate financing modes, building human capital while discouraging infrastructure development and undertaking developmental project in public private partnership, assuring full release of PSDP budget without cuts and careful re-estimation of cash flows and benefits.
He said that 82% foreign aid is related to projects on infrastructure building involving nuclear energy, power, railways and communication while only 13 per cent is aimed at social development. He said that provinces always faced problems in attracting donor assistance and now with the passage of 18th Amendment and 7th NFC award, development planning has been shifted to provinces. However, federal government will continue to fund higher education and provide for vertical programs of health and population, he added.
Dr Suleri lamented that PSDP in Pakistan heavily relies upon foreign assistance and suffers drastically due to uncertainties whenever flow of assistance is stalled. He said that PSDP provides lubricant to the economic growth engine while involving the hard and soft services. He said that country s PSDP takes into account important subjects such as infrastructure, social development, production and disaster management adding that the country was facing fiscal constraints during the transition phase of transferring the subjects from Federation to provinces under 18th Amendment.