Lawmakers are running wild with development budgets while important projects languish

In the backdrop of Pakistan’s fiscal landscape, development spending has been a critical area of concern, as revealed by the last budget. Not only is the allocated amount insufficient for the development of the county but most recently, it has been deemed insufficient to carry out the projects it was primarily allocated for. 

What this means is that the PSDP needs more injection if Pakistan is to keep up with its development goals for the current year. However, instead of getting an injection to meet the cost of already started projects, the PSDP has not only been reduced since it has been announced and has since not been used up, by the speed at which it was supposed to be used.

On top of that, a significant portion of funds had already been allocated for discretionary schemes for parliamentarians. Not only has that amount increased since the federal budget was approved but the drawing has also been alarmingly fast, leaving little funds to be used for the actual development in line with the central vision.

To understand, we first have to understand what these schemes are and how they are different from the development budget under the federal government. We first need to understand what the PSDP is. 

The PSDP

The development expenditure is allocated across various categories to address the country’s diverse socio-economic needs and promote sustainable development. One of the primary mechanisms for allocating development funds is through the Public Sector Development Programme (PSDP), which is a comprehensive plan that outlines the government’s development priorities and investment projects. 

It is the primary vehicle for allocating development funds in Pakistan. It encompasses a wide range of projects and programs across multiple sectors, including infrastructure development, education, healthcare, water resources, energy, transportation, and social welfare. What separates PSDP from the rest of the development is that it is typically prepared by the Planning Commission of Pakistan in consultation with various ministries and departments. 

This gives a very systemic importance to the problems identified by a team of dedicated professionals and allows the development expenditure to be optimally utilised according to the central development plan. It outlines the proposed projects, their estimated costs, and the allocation of funds for each project.

Once approved, the PSDP is funded through both domestic and external sources, including government revenues, loans, grants, and aid from international donors and financial institutions.

Parliamentarian Schemes

Among the large allocation of the PSDP funds, is one small yet significant head of parliamentarian schemes. 

Parliamentarian schemes refer to projects and initiatives that are proposed and implemented by members of parliament (MPs) in Pakistan. These schemes are funded through the same Public Sector Development Programme (PSDP) and are aimed at addressing the development needs of their respective constituencies. 

Under this “scheme”, parliamentarians are allocated funds to undertake development projects and initiatives in their constituencies, with the objective of improving infrastructure, social services, and overall living standards for their constituents. 

Hence parliamentarian scheme is a discretionary grant given to the members of the national assembly to identify public pain points, if any, in their constituencies and solve them on their own. This scheme is also referred to as Member Parliament (MP) scheme or Member National Assembly (MNA) scheme.

MP scheme as a political tool

In a typical cycle of expenditure, the PSDP funds are distributed in a 20-30-30-20 distribution with respect to quarters. Meaning that 20% of the allocated budget is spent in the first quarter, 30 in the second quarter and so on.

However even at the conclusion of the first 8 months (2.7 quarters) the government has been unable to spend 50% of the allocated funds. One big reason for this is the unavailability of funds. However, discrepancy exists between the expenditure of funds under various heads.

In the first eight months of the current fiscal year, parliamentarians have consumed a substantial portion of the allocated budget for their schemes, amounting to Rs 38 billion out of Rs 90 billion. Meanwhile, the development activities across 34 federal ministries struggled with a combined expenditure of just Rs 107 billion during the same period.

The total expenditure under the Public Sector Development Programme (PSDP) stood at Rs 237 billion in eight months, marking a decrease from Rs 250.3 billion in the corresponding period of the previous year. Of the allocated amount of Rs 940 billion, this marks only a 25.2% consumption.

A large head under the PSDP is for special areas. During the first eight months of the fiscal year, special areas received significant funding amounting to Rs 46.6 billion, constituting approximately 27.4% of their budgetary allocation of Rs 170 billion. Meanwhile, parliamentarians’ schemes accounted for Rs 37.98 billion, indicating substantial utilisation of allocated funds. This also indicates that the MNA scheme has received more than 42% of its allocated funds.

It is important to note here that the MP scheme that was set to be Rs 70 billion in FY23 was first revised to Rs 87 billion and then further to Rs 90 billion within the span of six months. The additional amount was taken out of the Special Areas Development head, making it easier for the parliament members of the then Pakistan Democratic Movement (PDM) to start projects in their respective constituencies, gathering popular support. At that time, it was termed “community based SAP (SDG Achievement Program)”, which would be used to achieve SDGs to address the urban-rural social constraint.

Before the elections, almost all the MNA’s of the PDM used their legitimised Rs 50 crores (Rs 500 million) each, for small scale projects. Projects such as building a street, repairing sewage lines or installing a gas/electricity/water connection. Essentially, these projects earned the candidates goodwill at the expense of the national exchequer.

But that is not what is wrong with this scheme. After all, each and every one of these micro projects can somehow be aligned with one or other SDG. The more fundamental questions that this ordeal raises is that should parliamentarians have discretion over allocation almost 10% of the development budget? If yes, are these aligned with the central development policy of the Planning Commission? And if there is a fiscal crunch, as the current one, should the discretionary scheme get priority over other important infrastructural or educational projects?

Even if all 174 lawmakers have the utmost concern for the UNs SDGs at heart, while spending their allocated money, aren’t their services best served in law making? A part often forgotten as the primary job of an MNA.

To put a perspective to this, not only were special and remote areas of Gilgit and Kashmir snubbed of important infrastructural framework because of an increase in the scheme, but the money required for the ongoing projects, all over the country, was redirected to the SAP.

Some of these projects include “Sindh School Rehabilitation Project under Flood Restoration Program,”, the “Women Inclusive Finance Development Program,”, and the “KPK Food security support project” etc.

Notably, the Higher Education Commission and the Ministry of Housing and Works have also faced challenges in utilising their allocated funds effectively.

The constrained development spending is likely to impede infrastructure projects and adversely affect the standards of living of the population. With insufficient funding, the country’s infrastructure development may face setbacks, exacerbating existing economic challenges. While it may make life easier for a limited time in the constituencies, the year will conclude without having met the infrastructural development goals for the fiscal years, setting the country back by not only that development but also the fruits of that particular development in the form of trade and exports. 

A classic example of that is the “Women inclusive finance development program” project. A project that was valued at Rs 31 billion, and would pay immense benefits in terms of social improvement, banking the unrepresented population of women in Pakistan, and integrating them within the national labour force. The project, since its conception, has faced delays and currently awaits the nod from the Executive Committee of the National Economic Council (ECNEC), due to lack of funds.

Conclusion

In the end it all comes down as a question of principle. One can argue that a constituent’s access to a cleaner street or a filter plant is more important than a textile company’s access to a logistical channel, and nor does this feature aim to counter that argument. The more basic question is, is the MNA in their right to make this choice alone? 

The question underscores the need for improved governance and strategic allocation of resources to optimise development spending in Pakistan. Addressing inefficiencies in fund utilisation and enhancing accountability mechanisms which are imperative for promoting both, a sustainable economic growth and enhancing the quality of life for citizens.