Slashing PSDP

Like the current fiscal year, the size of Public Sector Development Programme (PSDP) will remain restricted to allocations for ongoing development schemes in the next year. Finance Ministry has indicated to allocate Rs.600 billion in the budget of 2020-2 for this programme. In the budget of current fiscal year, Rs.675 billion was allocated. Rs.23 billion was earmarked for Diyamer Basha dam which could not be utilised for different reasons. An allocation of Rs.30 billion was made for Mohamand dam, the construction work of which is underway.

Out of the Rs.600 billion under next year PSDP, an amount of Rs.525 billion will be available for spending on under completion mega projects. The financing needs of the CDWP approved mega projects have estimated Rs.1.1 trillion by the Ministry of Planning. The squeezed allocations will hit hard productive projects in agriculture, conservation of water resources and projects of social sector development. It has made the implementation of 12th Five Year Plan impossible. It was the implementation of First and Second Five Year Plans that heralded in the 1960s decade of spectacular economic growth with desired trickle-down effect. It was the shelving of Third Five Year Plan during 1972-76 that economic growth rate plummeted to 2.2 percent during ZA Bhutto admisnistration. Pakistan is heading toward acute water shortages and stopping of funds for water conservation projects such as storage dams will make the water starved by 2025.

The revival and recovery of manufacturing sector will take time. In the prevailing grim scenario, agriculture remains the main engine of economic growth. Apart from water scarcity, agriculture will also face a shortfall of 0.5 million tonnes of fertilizers. The Ministry of Finance has now confirmed that economy will shrink and it will register a negative growth of 1.6 percent. The estimation is exactly what the World Bank, the International Monetary Fund and State Bank of Pakistan.