Rs800 bn proposed for PSDP in budget 2021-22

ISLAMABAD: The budget-making process for 2021-22 has kick-started as the Ministry of Finance has shared Indicative Budget Ceiling (IBC) with the Ministry of Planning for allocation of Rs800 billion for Public Sector Development Programme (PSDP) in the next budget 2021-22.

“Yes, the Ministry of Finance has shared the IBC for allocation of development funds under the PSDP to the tune of Rs800 billion for the upcoming budget,” the official communication sent by the Finance Division to Ministry of Planning reads out here on Wednesday.

The utilisation of development funds both at the federal and provincial levels remained pathetic during last two years. The Planning Commission released full funds for the fourth quarter (April-June) period of the outgoing fiscal year but the utilization failed to get momentum so far. It is yet to seen how the utilization of development funds will be geared up after Eid Ul Fitr. Out of the total allocated funds of Rs650 billion and release of the whole amount, the pace of utilization has been dismally slow and so far, utilization of funds stood at Rs370 billion.

However, the Budget Strategy Paper (BSP) approved by the federal cabinet stated that development funds will be allocated by the Ministry of Planning, Development and Special Initiatives to priority sectors, including infrastructure, social, science, information technology and production. Infrastructure allocation takes precedence with allocation, especially in transportation and communications, including railways, national highways and ports.

As per the commitment in the National Water Policy 2018, at least 10pc of the size of PSDP will be allocated to water sector projects mainly for augmentation and preservation of water resources during the next financial year. Amongst others, preference will be given to construction of large dams like Diamer Bhasha, Mohmand and Naigaj dams.

Similarly, along with construction of hydropower projects, investment will also be made for evacuation of power by upgrading transmission lines. Special areas are high priority of the federal government. In order to develop special areas and to bring them at par with other areas of the country, substantial investment will be made in new projects and required funds will be made available to complete the ongoing projects. Allocations include a 10-year development package for erstwhile Federally Administered Tribal Areas (FATA) and Karachi Transformation Plan. Furthermore, enhanced allocations will be made for Azad Jammu and Kashmir and Gilgit-Baltistan. The GB Development Plan for five years with average per annum funding of Rs55 billion will also be initiated. Development packages for new projects in Balochistan and rural Sindh will also be included in the next year's PSDP. Like special areas, the government's focus would be to invest in the underdeveloped regions of provinces for equity and parity.

In line with the Sustainable Development goals, higher education, health and environmental protection shall remain priority areas in the medium-term. Completion of ongoing projects will be a priority. Principal Accounting Officers have been authorized to re-appropriate funds from one budgeted project to another. Allocation to important sectors to create infrastructure would continue to be the government’s focus.

Special initiatives led by the prime minister are being implemented. Key initiatives include Ehsaas, Kamyab Jawan, Sehat Card, Loans for Small and Medium enterprises, merit scholarships for deserving students, tourism promotion, Billion Tree Tsunami and Naya Pakistan Housing scheme. All new initiatives in line with the Prime Minister’s vision will be implemented in letter and spirit.

On the other hand, development spending will be increased by 15 to 20pc on year-on-year basis for augmenting economic growth.