Punjab, if it were a country, would be the 12th most populous in the world - larger than Germany and Turkey. But in terms of GDP, it would rank 53 - better than Hungary and Kuwait. In terms of area, it is 83rd in the - bigger than Uruguay and Greece. The point is that with major fiscal space amid social sector development agenda in provincial space, the long term stability and growth of the Pakistan economy is hinged upon provincial leads, especially Punjab.
The province has recently developed its growth strategy 2018-23, synopsis of which was covered earlier in this section. (read "Punjab Speed 2.0"). The dynamism and inclusiveness of the new policy framework can be gauged from the fact that the strategy is being developed by the P&D and PERI teams itself. Earlier, in the previous regime, an excellent growth strategy was developed by external economists and contributors, spearheaded by Dr Ijaz Nabi.
The previous policy worked as employment generation per annum increased from 585,000 in FY13 to 982,000 in FY18. But the dynamism in the policy implementation was dependent upon presence of external economists and contributors. And in the process, government’s own economic and planning departmental capacity could not be developed and the capability remained untested.
This time around, the internal teams are engaged, and this will help build capacity of the government institutions which is critical for developing institutional memory. This is evident from the fact that only one technical advisor, Usman Khan is engaged who is embedded with the internal team.
Punjab grew by 4.2-5.8 percent in the last five years which is better than the rest of the country. The challenge is to continue the momentum and take the growth rate over 7 percent in five years. The previous government put an accelerator on the Annual Development Programme (ADP) which peaked at 3.2 percent of Punjab GDP in FY17 before dipping to 2.2 percent in FY18. There were two problems in the ADP - half of its spending was in Lahore while the concentration of spending was in infrastructure - traditional brick and mortar.
The idea is to spread the spending across the province connecting ADP allocation to job creation and social development. But the driver of the growth should be the private sector as investment by private sector in Punjab is around five times that of government. The PGS 2018-23 is eyeing sectors where Punjab has a comparative advantage in the national context to harness the potential.
Since Punjab comparative advantage is in agriculture, creating backward and forward linkages is the best bet. The strategy paper says that if Punjab agriculture grows by one percent, the overall GDP grows by 0.4 percent, which is almost double the agriculture share in GDP. The other element is to maximize the output of ADP on human development - recipe for moving towards knowledge economy. That is why share of ADP is envisaged to be higher in education, health and roads.
The PGS is synced with PTI government’s agenda of housing and job creation. The government is using an internally produced growth model where based on historic regional income accounts, future policy steps are anchored. The model has 120 equations and sought to have growth in agriculture, industry and services to create jobs, attract investment and improve social indictors.
The growth rate of Punjab is projected to increase from expected 3.7 percent in FY19 to 7 percent in FY23 with an average growth rate of 3.9 percent in agriculture, 7 percent in industry and 5.5 percent in services for FY19-23. In order to move up the ladder of growth, the strategy assumes no decline in provincial share in divisible pool whilst more than doubling provincial revenues.
The absolute growth estimates of Punjab ADP are ambitious - to move up from Rs238 billion in FY19 to Rs865 billion in FY23 and that is why provincial own share in revenues is critical. And within it, the share of roads and transport declines from 27 percent to 20 percent while increase in education and health from 14 percent each to 24 percent and 17 percent, respectively.
If Punjab moves up the growth path, the model estimates 2 million employment generation in FY23 with commutative employment generation at 7.3 million in five years - Punjab alone is targeting three fourth of PM's plan of 10 million jab creation. It is quite ambitious.
The idea is to concentrate in agriculture and SMEs as Punjab's share in country's SME is relatively higher than its share in GDP, while it is the other way around in large scale manufacturing. Good luck Punjab team!
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