Rs1.32tr approved for national development programme

ISLAMABAD: As the provinces drastically cut their development plans, the National Economic Council (NEC) on Wednesday approved Rs1.32 trillion worth of consolidated development programme for next year — about 12pc lower than current year’s Rs1.5tr — to achieve an economic growth rate of 2.1 per cent.

The meeting of the NEC — the country’s highest constitutional forum on economy — was presided over by Prime Minister Imran Khan and attended by its federal members. All provincial chief ministers and other members participated via video-link.

The meeting approved Rs650 billion federal Public Sector Development Programme (PSDP) for next year, down about 7.3pc when compared to current year’s Rs701bn. This includes Rs70bn allocation for short-term Covid-19 response projects.

The Annual Development Programmes (ADPs) of the provinces were drastically slashed. As such, the cumulative ADPs of the four provinces would be around Rs674bn, down 16pc from current year’s Rs799bn allocation.

While Punjab’s development budget mostly remained protected at Rs337bn for next year against Rs350bn for current year, Sindh and Khyber Pakhtunkhwa appeared to have massively cut their development allocations. This was evident from Rs165bn allocation by Sindh for development schemes next year compared to Rs279bn during current year, showing a reduction of almost 41pc.

KP’s development plan for next year was also restricted at Rs100bn compared to Rs236bn allocation for current year, down about 58pc. Balochistan’s development plan for next year is estimated at Rs75bn, down almost 31pc when compared to Rs109bn for current year.

The allocations for Azad Kashmir at Rs24.5bn and Gilgit-Baltistan at Rs15bn were kept unchanged. An official said Rs48bn have been set aside for the tribal region under the 10-year development plan for its mainstreaming and development schemes. For the first time, the PSDP does not include any unapproved project, he added.

The meeting reviewed the state of economy during current fiscal year and the outlook for FY 2020-21. It approved the GDP growth target of 2.1pc supported by sectoral growth rates of agriculture (2.8pc), industry (0.1pc) and services (2.6pc) for next year.

The NEC meeting was briefed that ‘even if the lockdown is completely lifted, the second-round impact of Covid-19 is expected to keep the growth performance of the country under check’.

The meeting was alerted that growth targets were “subject to favourable weather conditions, post Covid-19 economic recovery, managing current account deficit, consistent economic policies and aligned monetary and fiscal policies”.

It was reported that a quick recovery was expected while rehabilitation and recovery of industrial and services sectors would boost growth prospects. Monetary easing and debt relief will also improve fiscal position. Inflation is expected to remain in single digit at 6.5pc. External sector will also be improved due to resumption of remittances inflow and better export performance.

Industrial sector is targeted to grow by 0.1pc, with 0.7pc contraction in manufacturing sector based upon 2.5pc contraction in large scale manufacturing.