Contrasting provincial development budgets

All four provincial budgets are in. Now it’s time to examine how they fare against each other on development. It’s a query made all the more important due to the shrinking fiscal space that the federating units will increasingly have to adjust to in the next few years. It’s another matter that the provinces, in total, have allocated a substantially higher sum for development in FY20.

The four provinces have allocated a combined total of Rs1.07 trillion for development next fiscal – up 27 percent over original FY19 allocations. This yearly growth is proportionally more than the 11 percent yearly growth envisaged in current expenditures for FY20. Consequently, development has a budgetary share of 24 percent across the provinces, up from 21 percent in FY19.

The bigger development pie for next fiscal owes itself to higher allocations by smaller provinces and has come despite a significant cutback coming from Punjab. For example, Khyber Pakhtunkhwa (KP) has a 30 percent share in the Rs1.07 trillion provincial development allocations, proportionally more than its population share of 17 percent (including tribal areas).

Meanwhile, Balochistan has a 6 percent share in population but it has a 12 percent share in the cumulative FY20 development allocations. Sindh, with a 26 percent share in provincial development budget for next fiscal, is also punching above its population share of 23 percent. Meanwhile, Punjab, with a 54 percent share in population, has a 32 percent in the development pie. Among the provinces, the KP takes the lead in assigning a higher share of estimated spending to development, thanks in part to the federal government’s support to the uplift of the newly-merged tribal areas. The KP has earmarked 37 percent of its total FY19 budget for development. Up next on that count is Balochistan (30%), followed by Sindh (23%) and Punjab (17%).

Beyond the clarity of budget and into the hazy realm of reality, there is little likelihood that those development allocations will be spent to a reasonable level once FY20 hits the calendar. The way FY19 budgets have been revised downwards – with development’s share reduced to 15 percent of overall spending across the provinces, as opposed to 21 percent share of development in the original FY19 budgets – doesn’t inspire much confidence that next fiscal will be any different.

Still, some provinces have been doing better than the others when it comes to actual development spending. Punjab has been a consistent performer in that regard. Between FY16 and FY19, Punjab allocated an average of 25 percent of its budget for development and also spent 25 percent of its overall actual spending on development. But those were mostly the PML-N years; let’s see how PTI fares.

In the same period, Sindh reserved an average of 31 percent of its overall budget for development but spent only 24 percent of total spending on it. Meanwhile, KP, the budgetary leader on development, appropriated 33 percent of its budget on development but spent only 29 percent of overall spending on it. Balochistan is the leader – budgeting 24 percent on development in those years but actually spending a higher, 28 percent. Let’s wait and see what FY20 has in store for development across provinces.