PSDP disbursements

The Public Sector Develo-pment Programme (PSDP) has remained funded through the caretaker governments tenure. Since the previous government bid farewell on March 16, more than Rs30 billion have been released to federal governments flagship development programme.
Data from the Planning Commission shows that the Planning & Development division had disbursed Rs170.7 billion till May 10. The P&D division is authorised to disburse up to Rs234 billion out of the total PSDP budget of Rs360 billion till June 30. The division still has to disburse Rs63.3 billion, or 27 percent of its funds release ceiling, in last seven weeks of the fiscal year.
However, a complete utilisation of development funds seems improbable this year, too, due to rising fiscal deficit and the power sectors pressing liquidity needs.
The government divisions and ministries receiving significant PSDP funding till May 11 include: Kashmir affairs & Gilgit-Baltistan affairs (Rs17.6 billion), Communications (Rs16.6 billion), P&D (Rs16.4 billion), Railways (Rs12.9 billion), Fata (Rs12.5 billion), the PAEC (Rs9.9 billion), Housing & Works (Rs6.9 billion), and Finance (Rs6.1 billion).
The Higher Education Commission received Rs10.3 billion against its FY13 development allocation of Rs15.8 billion. Wapdas water-sector projects received Rs35.3 billion, which included major outlays on projects like raising of the Mangla Dam, and development works on various small dams & canal systems. About Rs3.1 billion was released in FY13 to Wapda for land acquisition of the Diamer Basha Dam.
Yet most of these divisions and ministries remain under-funded relative to their development allocations. Despite rising government spending on PSDP in recent years, the PSDP portfolio has swelled to nearly Rs3 trillion in estimated costs, due to a variety of factors cited by the Planning Commission, including hasty approval of new, politically-motivated projects that have limited public value.
The PML-Ns federal government will face tough options here. Creating fiscal space for almost 1,200 existing, unfinished projects will be a challenge, especially when the party has promised large-scale infrastructure projects - such as motorways, dams, housing projects, and development of new urban centers and cities - in its manifesto.
The Nawaz Sharif-led party has tried to balance its infrastructure development binge this time by vowing large investments in health, education and vocational training. However, getting development priorities right alone will not cut it - capable management and sustainable financing mechanism are also required. Encouragingly, PML-N has indicated that it will not rely entirely on state apparatus and treasury for development projects.
"PML-Ns preferred policy will be to develop infrastructure projects through private sector on BOO / BOT (Build Own Operate/Build Operate Transfer) basis. In addition to the PSDP, we will encourage infrastructure building and financing institutions through public-private partnership to expedite infrastructure development," signaled the party in its manifesto.
To mobilise the private sector in infrastructure development and develop financing schemes, the party will establish a single-window "Bureau of Infrastructure Development". The bureaus main focus will be "to improve transport and communication by constructing national trade corridors and providing mass transit facilities in all major cities."
Over the years, the Planning Commission and many independent economists have strongly advocated for a similar development approach to address the shortcomings in PSDP regime, in order to maximise its role in kick-starting growth creating socioeconomic value. How the new government fares with its stated policies in this area remains to be seen...

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Federal PSDP FY13 - Rs (bn)

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                Ongoing     Throw          FY13 budgetary                  FY13

Sector         Projects   Forward            allocations              Releases*

                   (No)    (Cost)   (Govt Funds)  (Foreign Aid)  (Jul 1-May 10)

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Infrastructure    347      2,320          126            86                  86

Social            715        555          127             8                  78

Others             77         42            3             0                   2

ERRA                -          -            5             5                   4

                                          261            99

Total           1,139      2,917          360                               171

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