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The new development budget 2021-22 explained!!

The Minister said that the allocation for the federal development budget is Rs900 billion for 2021-22 against Rs650 billion for 2020-21, showing an increase of 38.5 percent YoY, while the provincial development budget is of Rs1.2 trillion for 2021-22 against Rs867 billion for 2020-21, an increase of 38.6 percent.

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In a bid to address the reservations of some in the opposition and explaining the PSDP budget, the Federal Minister for Planning and Development Asad Umar on Tuesday held a press conference.

Addressing a press conference along with Chairman China-Pakistan Economic Corridor (CPEC) Asim Saleem Bajwa, Asad Umar said besides the federal government, provinces too significantly increased their development budget.

He said that the National Economic Council (NEC) has approved the allocation of Rs2,102 billion for the country’s development programme, including Rs87 billion for the China Pakistan Economic Corridor (CPEC), for 2021-22 against Rs1,527 billion for 2020-21 showing an increase of 36.4 percent.

Asad Umar said that the allocation for the federal development budget is Rs900 billion for 2021-22 against Rs650 billion for 2020-21, showing an increase of 38.5 percent YoY, while the provincial development budget is of Rs1.2 trillion for 2021-22 against Rs867 billion for 2020-21, an increase of 38.6 percent.

According to the NEC decision, the development budget of Punjab is Rs500 billion for 2021-22 against Rs310 billion for 2020-21 an increase of 61.3 percent, Sindh’s Rs321 billion against Rs194 billion, an increase of 65.5 percent, Balochistan’s Rs133 billion against Rs89 billion, an increase of 49.4 percent and Khyber Pakhtunkhwa’s Rs248 billion against Rs274 billion, a decrease of 9.5 percent year-on-year.

According to the minister, a highly significant increase in the development budget was one of the reasons behind the projected 4.8 percent growth for the next fiscal year. He said that the GDP could even exceed 5 percent. He said that there was a huge difference in allocation and actual expenditure during 2017-18, therefore, he preferred five-year-old data – 2016-17.

Comparing the development allocation with previous years (2016-17), Asad Umar informed that the past government allocated 56 percent of the total PSDP for energy, transport and communication projects whereas this share has been reduced to 40 percent in the upcoming year.

Read More: Pakistan sets growth target 4.8%, development budget highest in history

However, he clarified that work on the road projects had not been reduced as the current government was spending even more funds on the road projects through Public-Private Partnership (PPP).

He said an allocation of Rs244 billion is made for motorways, highways, interprovincial/district roads, airport, Railway projects, adding that 3,261km length of new roads will be added to the network.

The major projects talked about by the minister that got the allocation include Pass Economic Corridor Project (Rs. 8.5 bn), Sukkur -Hyderabad Motorway Land (Rs. 4.6 bn), Eastbay Expressway Gwadar (Rs. 2.1 bn).

Some other projects were Dualization and Improvement of Existing N-50 – Yarik – Sagu – Zhob -210 km (Rs. 1.6 bn), construction of M–8 Hoshab–Awaran–Khuzdar (section-2 ) 168 KM (Rs. 1.5 bn), improvement and widening of Chitral-Booni-Mastuj-Shandur Road (Rs. 2 bn), roads linking motorways in Punjab, Main Line I (ML-I) (Rs. 6.2 bn) and Gwadar Airport (Rs. 1.1 bn).

Talking about the Public-Private Partnership, he mentioned that the government would be approving 14 high-impact PPP transactions worth over Rs978 billion from April to October 2021. He added that for the first time, the government had allocated an amount of Rs 61 billion for an innovative Viability Gap Fund (VGF).

Major projects under the VGF mentioned Sialkot-Kharian Motorway, Sukkur-Hyderabad Motorway, Karachi-Quetta-Chamman Road, Karachi Circular Railway, Karachi-Pipri Freight Corridor, and Railway Hospitals.

7 percent of the PSDP budget, would be allocated to VGF in the upcoming FY 2021-22.

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Bringing focus on funds allocation for water projects, Asad Umar said that they had been increased from 4 percent in 2016-17 to 10 percent in the upcoming fiscal year, and for social and regional equalization, the share had been increased from 23 percent to 31 percent, and for production, science, technology and IT, the share had been increased from 2 percent to 5 percent.

Giving details of infrastructure water sector projects, the minister said the government was investing in building large dams and water conservation system as per commitment under National Water Policy since a new cultivable command area of 100,000 acres was developed during 2020-21 and further 200,000 acres would be added during the next two years.

He said the major projects in this sector included Diamer–Bhasha, Mohmand and Dasu (Rs. 84.5 bn), K-IV, Nai Gaj Dam, Rainee Canal, and Small Storage Dams in Sindh (Rs. 25 bn), Karachi Canal Balochistan, Awaran, Winder and Panjgur Dams (Rs. 8.2 bn) and small/medium dams in Balochistan, Ghabbir Dam and Papin Dam in Punjab (Rs.3.65 bn).

He further said that for the energy sector investment includes de-bottlenecking and upgradation of the transmission system (Rs100 billion). Mr. Umar said that shutting down of low-efficiency plants would only be possible if the transmission system was updated.

The minister mentioned investment in loss reduction and rehabilitation projects in high loss DISCOS focus on provision of electricity and gas to the CPEC SEZs, K2 and K3 coastal power project Karachi (Rs16.5 billion), Tarbela 5th extension HPP (Rs4.6 billion) and Evacuation of Power from Suki Kanari (Rs5.5 billion) and interconnection of isolated Makran network at Basima (Rs5 billion).

Talking about the education sector, Federal Minister Asad Umar said that the government has allocated Rs44 billion, under which 105 universities would benefit from 120 different projects.

He said the Higher Education Commission (HEC) was allocated 2.7 percent of the budget in 2016-17, which has been increased to 4.9 percent.

To a question, the minister pointed out that the CPEC was a national project that was always put on priority. The priorities for the national projects never change with the change of any political party, he added.

The work on the mega project was going on at full pace, he said.

He said in the PSDP 2021-22, an amount of Rs87 billion had been proposed to be earmarked for various CPEC projects.

Talking about Health spending, the minister said that Rs51 billion was spent on the health sector in the outgoing fiscal year.

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He said that for reducing regional disparities special packages have been added to the PSDP, including accelerated development plan for Southern Balochistan, Karachi Transformation Plan, Socio-Economic Development of Gilgit-Baltistan, Sindh Development Plan for 14+ Priority Districts, and allocation for Newly-Merged Districts of Khyber-Pakhtunkhwa enhanced.

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