PSDP 2011-12

The National Economic Council, in its meeting on Saturday, approved a Public Sector Development Programme of Rs 730 billion, with a provincial component of Rs 300 billion, an ambitious target for development spending which would have to be defended at all costs. The meeting was boycotted by PML(N) Senator Ishaq Dar, who was to attend as Leader of the Opposition in the Senate, but who was also a former finance minister, who accused the present government of failing to follow its own legislation and policies. With this trenchant criticism by a predecessor made, the present Finance Minister, Dr Abdul Hafeez Sheikh, told the Council that growth was targeted at 4.2 percent for 2011-12, while it was expected to be 2.4 to 2.5 percent in the current fiscal year, 2010-11, which saw the full effects of the floods of the last monsoon, the worst Pakistan has ever seen.Dr Sheikh would know better than most that government expenditure determines growth, and its crucial component is the PDSP. This must not be cut if the growth target is to be maintained, and the temptation in times of trouble, as now, would be to balance the federal budget by cutting the PDSP. The Prime Minister told the meeting that the federal government would attempt to carry out ongoing schemes, rather than opting for schemes which had to be started. His suggestion that the provinces also follow this pattern was welcome, but it should be remembered that many unapproved development schemes were started for political reasons, and if the government was to control this political interference, it would yield more results than any proclamations in NEC meetings. Another thing the Finance Ministry needs to remember is that slashing the PDSP means slashing growth, which in turn means a lower tax revenue is generated, and thus the lowered PDSP will prove as difficult to finance as the original one. – Nation