Throughout the initial eight months of the current fiscal year, development spending continued to decline, while government funds were consistently allocated to discretionary schemes for parliamentarians, as indicated by official data.
During this period, parliamentarians utilized Rs38 billion out of the allotted Rs90 billion from the budget for their schemes, as per the latest data on development expenditure released by the Planning Commission.
Meanwhile, development activities under the other 34 federal ministries during the 8MFY (July-February) struggled, with a combined expenditure of just Rs107 billion.
The total expenditure under the entire Public Sector Development Programme (PSDP) stood at Rs237 billion in eight months, which is over Rs13 billion less than the Rs250.3 billion spent in the same period last year. This figure also encompasses spending on corporations and special areas like Azad Kashmir, Gilgit-Baltistan, and the merged districts of the formerly Federally Administered Tribal Areas.
In absolute terms, special areas received the most funding with Rs46.6 billion in eight months, followed by Rs37.98 billion for parliamentarians’ schemes.
Special areas received around 27.4% of their budgetary allocation of Rs170 billion, while MNAs’ schemes received 42.22% of the allocated Rs90 billion.
In October 2022, the then Pakistan Democratic Movement (PDM) government increased the allocated amount for schemes—dubbed the Sustainable Development Goals Achievement Programme (SAP)—to Rs87 billion, ensuring that all of the coalition’s then 174 members of the National Assembly receive Rs500 million for implementing small projects in their constituencies.
The same government subsequently increased the funds by Rs3 billion to Rs90 billion for the current fiscal year and authorized the release of Rs61 billion before leaving office in the second week of August 2023.
By August 31, only Rs14.4 billion had been utilized. The amount increased to Rs22.9 billion by the end of Q1 on September 30 and crossed Rs35 billion by the end of December, accounting for 39% of the annual allocation.
In January 2024, the Special Investment Facilitation Council (SIFC) and the National Economic Council (NEC) decided to cap SAP funds at Rs61 billion, which were already authorized for disbursement, and save the remaining Rs30 billion for deficit financing.
Under the disbursement mechanism announced by the Planning Division, the development funds allocated in the federal budget should be released at a rate of 20% in the first quarter (July-September), followed by 30% each in the second (October-December) and third quarters (January-March). The remaining 20% is released in the last quarter (April-June) of the fiscal year.
However, the actual consumption has fallen short of expectations. For example, only Rs46.6 billion out of a projected Rs120 billion should have been released for development activities in special areas by now.
Likewise, out of Rs940 billion allocated for PSDP projects including dams, roads, and funds for health, education, and other sectors, only Rs237 billion has been spent, around Rs421 billion short of the estimated consumption by the end of 8MFY.
Excluding special areas and MNA schemes, only Rs152 billion was spent on infrastructure and development.
The official data showed that excluding SAP, the actual development expenditure by three dozen ministries and divisions in eight months amounted to just Rs154 billion against their annual allocation of Rs563 billion.
Another Rs30.5 billion was spent in the water sector against its annual allocation of Rs110.5 billion.
Likewise, Rs44.7 billion was spent by the National Highway Authority (NHA) and power companies against their total allocation of Rs212 billion, even though substantial foreign exchange inflows had materialized in these two sectors.
The NHA used Rs25 billion, or 16% of its Rs156 billion allocation, while power companies consumed Rs20 billion, or about 36% of their Rs55.3 billion allocation.
Ironically, the Higher Education Commission could only utilize Rs14.5 billion or 24% of its Rs60 billion allocation, while the Ministry of Housing and Works spent Rs8 billion or about 20% of its Rs41 billion allocation.
Railways spent around Rs18.8 billion against its annual allocation of Rs33 billion.
The data showed that the government had authorized the release of Rs508 billion till January 2024, while no additional amount was released in February.
This included Rs372 billion for 36 ministries and divisions (including Rs61.3 billion for MNAs) and Rs127 billion for NHA and power companies.
This will be the third year in a row that the country’s under-funded infrastructure development will remain constrained by drastic cuts, even in funds allocated by the parliament.
Last year, the development program was hampered by massive floods. Consequently, development projects are likely to suffer serious negative impacts due to insufficient funding, further affecting the standards of living of people already grappling with record inflationary trends.
