PSDP utilisation: Centre, provinces failed to utilise allotted funds

ISLAMABAD: The utilization of development funds at provincial levels remained dismally poor and the provinces have been left with no other option but to slash down development outlays from Rs950 billion to Rs867 billion for the outgoing fiscal year 2020-21.

Official documents showed that so far, the utilization of funds under the Public Sector Development Program (PSDP) at federal level also remained pathetic as it stood at just Rs421 billion as of June 1, 2021 against the total allocation of Rs650 billion for the outgoing fiscal year ending on June 30, 2021.

The Ministry of Planning has so far released funds to the tune of Rs563 billion out of the total allocated amount of Rs650 billion but pace of utilization failed to pick up owing to a variety of reasons.

The utilization of development funds at provincial levels remained slower, so the provincial governments were forced to revise downward the funds from the projected amount of Rs950 billion to Rs867 billion for the current fiscal year 2020-21.

The development spending in Punjab and Sindh remained poor. It was the third consecutive year when Punjab under the Buzdar administration failed to utilize its allocated development funding. With the existing pace, the socio and economic indicators of the largest province of the country will deteriorate in months and years to come. The Punjab government had allocated Rs337 billion for its development outlay, which was increased to over Rs381 billion. Out of Rs280 billion releases so far, Punjab utilized development funds of around 68 percent. With the performance of Punjab on utilization of funds, it seemed that the revised estimates of utilizing funds of Rs867 billion would be missed with a big margin.

There are different reasons for low development spending at both federal and provincial levels but the fear of NAB played havoc with the development projects because bureaucrats were not ready to sign official files related to utilization of funds for development purposes. Even Federal Minister for Planning Asad Umar had conceded last week that NAB fear was choking development spending and the government would grant immunity to bureaucrats and businessmen by excluding them from the NAB domain as now they obtained majority in both Houses of Parliament or if the need arose, the joint sitting of the parliament could be summoned.

At the federal level, the government had allocated Rs577 billion as rupee component for PSDP out of which the utilization of funds stood at Rs321 billion as of June 1, 2021. The government had allocated Rs73 billion as foreign aid into PSDP out of which the received aid increased to Rs90 billion and it got utilized till June 1, 2021.

As per the commitment of Principal Accounting Officers (PAOs) of different ministries/divisions, the National Economic Council (NEC) has been informed that the allocated PSDP funds of Rs650 billion would be utilized by June 30, 2021.

This commitment demonstrates highly flawed development mechanism existing in the country where over Rs130 billion would be utilized just in last 29 days of the fiscal year. The government has given the deadline of May 31, 2021 for ministries/divisions and departments to surrender lapsed funds but practically this practice continued unabated till 12.30pm on June 30 night every year.

The NEC has also been informed that it was expected that 217 projects costing Rs190 billion was likely to be completed by June 30, 2021.