Islamabad, May 23, 2012 (PPI-OT): Pakistan should reorient its Public Sector Development Programme (PSDP) with pro-poor growth and complimentary governance reforms, invest on infrastructure development, redistribute wealth, enhance resource mobilization capacity of provinces, integrate rail-road infrastructure, and strike a balance in energy mix by reducing its massive reliance from oil to renewable energy sources: SDPI Seminar
Eminent economic experts, while proposing the above short, medium and long term measures to rehabilitate economic and social development in the country, maintained that the absence of planning, no investment in infrastructure development, mismatch in PSDP requirements and allocations, oil-dependent energy mix and weak monitoring mechanism are the fundamental challenges of Pakistan’s economy and budgetary planning process.
Dr. Kaiser Bengali, Former Advisor Planning and Development of Chief Minster Sindh, Dr Abid Qaiyum Suleri, Executive Director, SDPI, Dr Vaqar Ahmed, Research Fellow, Economic Growth Unit, SDPI said it during SDPI special seminar on ‘Development priorities in federal budget 2012-13’ here on Wednesday.
Fauzia Ejaz, Member National Assembly of MQM presided over the proceedings and urged for a strong accountability culture in the country coupled with provision of social justice and good governance. Tahir Dhindsa, Editor of SDPI Economic Bulletin moderated the discussion and maintained PSDP is useless without governance reforms and long term growth considerations.
Dr Bengali, sharing his recent experiences of working with Sindh government, lamented there is no vision, direction, agenda and also no monitoring of projects in the government. He said that the state has to invest at least 10 percent of total GDP on infrastructure to develop a competitive economy with regional countries such as India and China.
He said Pakistan was development and welfare state during 1947-77 as it created assets such as factories, power stations, dams, highways and power complexes whereas from 1977 to onwards the state has become a national security state experiencing an era of assets depletion including no investment at all in infrastructure development during last 10 years in particular. “Pakistan suffers with extreme infrastructure deficiency, we are an economy which is de-industrializing, we are consuming much but not producing” he lamented.
Criticizing existing important-dominated and services-dependent economy of the country, he proposed resurrection of welfare state and manufacturing-based economy. He also proposed a shift from road to rail transportation while integrating railway and NLC especially in the context of freight which will help to reduce extended reliance on diesel which is also one the major reasons for high electricity production costs.
He recommended linking the Gwadar with Kandhar and diversion of Afghan Transit Trade towards this underutilized port which will boost the economy as well as fight the militancy through economic opportunities and employment instead of military means alone.
Dr Vaqar recommended both short and medium term measures to rehabilitate and bring the stability factor in the economy. He said 85 percent of development projects are politically motivated while ignoring economic rationale and 38 percent of PSDP does not reach poor.
He said, on short term, the revival of growth rate is vital through increased productivity while addressing the energy crisis whereas some form of structural reforms such as tax and trade reforms are fundamental for the country on medium term basis.
He underlined re-alignment of PSDP in forthcoming budget to achieve a pro-poor growth while budget should lead to re-distribution of wealth through prudent taxation measures. Raising concerns over the missed self-imposed growth targets, he said the country is well below average growth rate of South Asian countries and even behind average growth rates of Sub-Saharan states due to mainly miss governance.
He also underscored on the need of strong monitoring mechanisms of projects adding that the Planning Commission last year was able to conduct only desk monitoring of mere 600 projects out of 1850. He urged for complimentary governance reforms and restructuring of the boards of public sector enterprises.
Dr. Abid was of the view that PSDP allocation in the country over the years was mis-directed and wrongly prioritized. He predicted the budget would be a difficult exercise both for government and people. “It would be a classical lose-lose situation as government would not be able to perform economically well and people would not be able to get any relief from budget” he forecasted.
Citing an example of development priorities in forthcoming budget, he said out of 150 million rupees proposed for Ministry of Climate Change, 76 million would be used on Global Change Impact Study Center, mainly on salaries, 27 million for land management plan, and 15 millions for awareness raising at the cost of developing disaster risk reduction and management mechanisms.
He said there are no allocation for National Zero Hunger Action Plan recently inaugurated by Prime Minster to fight hunger and malnourishment in the country despite claims of a number of initiatives including data collection. Dr. Suleri lamented over the non-allocation of funds for renewable energy sources in the budget.
He underlined the need for balancing the energy mix from oil to renewable energy adding the country produces around 39 percent of its electricity from oil whereas India produces only 1 percent. He suggested increased resource mobilization capacity of provinces including focus on energy production besides readdressal of regional disparity. “Budget is not mere an instrument to end people’s sufferings but it is a process important to ensure country’s long term development agenda” he concluded.
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