Sindh: big on infrastructure

Sindh has not been a leader when it comes to development spending. In the eight years between FY09 and FY16, the Sindh government under the PPP spent an average of 25 percent of their total annual expenditures on public sector development programme (PSDP) projects (data source: federal finance ministry). On that count, Khyber Pakhtunkhwa leads with 30 percent, followed by Baluchistan (27%), and Punjab (26%).

But that may change if the latest Sindh budget is anything to go by. The provincial government has budgeted to spend a total of Rs344 billion on development projects next fiscal. This includes Rs287 billion for provincial PSDP program, Rs30 billion for district development, and Rs27 billion in federal development grants. So, Sindh is planning to spend 33 percent of its Rs1.04 trillion FY18 budget on development – which is about one percentage point higher than what Punjab intends to do in FY18. The Rs344 billion development budget is remarkably ambitious: it is 42 percent higher than the revised FY17 budgetary estimates, which had put development spending at 28 percent of overall expenditures.

To get an idea where the development money is going, let’s analyze the Rs287 billion provincial PSDP, details of which are provided in the budgetary documents. About 85 percent of the PSDP is funded by the Sindh government and the remaining by foreign project assistance. Within the provincial component, 38 percent of the money will be spent of new schemes and the remaining on existing schemes.

The PSDP doesn’t provide breakdown of social sector projects. However, our calculations show that the number allocated to various social sector domains is close to Rs90 billion. That’s a 31 percent share in the FY18 PSDP. This is similar to Punjab, which has also allocated roughly 32 percent of its FY18 Annual Development Plan for social sector projects.

It is the local government schemes (Rs26 bn) that are prominent among social sector recipients. This is followed by education (Rs24 bn), health (Rs19 bn), public health engineering (Rs6 bn), rural development (Rs3 bn), and sports & youth affairs. (A community development programme for SDGs has been allocated Rs20 billion, but it is unclear how much of that will go into social sector, so it wasn’t counted in our estimate.) Just as in Punjab, the brick-and-mortar spending also rules supreme in Sindh budget. The highest development allocation was for the Works & Services department (Rs35 bn), to build roads, bridges, and buildings. Roads also take up Rs8 billion out of Rs26 billion local-government budget. About Rs34 billion have been allocated for irrigation and another Rs15 billion for lining of main canals. The government will also be spending roughly Rs14 billion on developing Thar Coal infrastructure.

More roads, flyovers and water pipelines are in the offing as Rs12 billion have been allocated for ‘mega projects’ in Karachi. Karachi also has a large share in another Rs3 billion to fund transportation and mass transit schemes in Sindh’s metropolitan areas.

Then there are schemes under planning & development department (Rs8.5 bn), and vague schemes like programme for SDGs (Rs20 bn), new development initiative (Rs5 bn) and special initiatives (Rs2.5 bn), that are presumably high on brick-and-mortar content. Beyond the PSDP budget, one also suspects plenty of concrete in the Rs30 billion allocations for district development schemes.

Like Punjab, Sindh has also gone big on infrastructure spending. There are, of course, infrastructure gaps that need to be plugged in a number of areas. But it is worrying to see provinces – which have the chief responsibility for social sector issues like healthcare and education post-Eighteenth Amendment –allocating less than a third of their development budgets to social sectors.