Center has decided that it will stop financing provincial development projects, particularly devolved subjects, to decrease financial burden.
With increasing resource crunch, the Centre has decided in principle to stop financing provincial development projects, particularly those relating to devolved subjects, to shift to the federating units the financial burden that now stands at above Rs320 billion.
This is part of a new National Development Framework (NDF) under which the federal government wants to restrict its investment priorities to the areas of federal responsibilities and ensure that the provinces take full fiscal responsibility of all devolved subjects. The issue was discussed at a special meeting of the Central Development Working Party (CDWP) on Monday. It was presided over by Deputy Chairman of Planning Commission (DCPC) Mohammad Jehanzeb Khan.
A senior Planning Commission official said that 16 federal ministries had been devolved along with development projects to the respective provinces following the 18th Constitution Amendment and abolition of Concurrent List. The financing of projects of provincial nature was discouraged through the Federal Public Sector Development Programme (PSDP) except for core vertical projects of health and population till 2017.
The financial burden on the federal budget, however, kept on increasing despite the fact that its fiscal share in divisible pool is shrinking from over 57 per cent to about 45pc under the 7th National Finance Commission (NFC) award almost at the same time. The provincial projects have since then crept back into the federal PSDP, leaving a limited fiscal space for projects of national importance.
“In PSDP 2021-22, about 331 are provincial nature projects worth Rs1.151 trillion (among about 1,190 total PSDP projects),” said the official, adding that about Rs345bn had already been spent by the Centre on these projects with an allocation of Rs330bn. These projects should be financed by the provinces themselves, he added.
Reviewing the policy guidelines during the CDWP meeting, the “DCPC highlighted that Planning Commission is in the process of developing an NDF which will guide priorities for investment by the federal government”, said an official statement, adding that “there are overlaps in rules of business and there is a need to carve out roles and responsibilities at the federal and provincial levels”.
The NDF will also be presented to the provinces for feedback before taking it to the National Economic Council, said the statement.
The meeting noted that because of provincial burden the federal mega projects of national importance were suffering on account of cost overruns and delays. It said the NEC had already decided in principle at the time of budget for this year that it was becoming impossible for the Centre to finance provincial projects, except for social sector projects under SDGs.
Under the existing policy approved by the NEC in June, the provinces are required to bear the cost of land acquisition, resettlement, provincial taxes and cost of project monitoring units and ensure their sustainable operation and maintenance.
The meeting proposed a review of SDG-related projects to rationalise their fiscal burden on the Centre and the provinces would not, by policy, demand financing projects of provincial nature through the PSDP.
The prime minister will also be requested to approve a policy under which schemes proposed by the parliamentarians be referred to the provinces for inclusion in the provincial annual development plans.
The official statement said the CDWP discussed the policy guidelines for “financing of provincial nature projects through federal PSDP, allocation of a percentage of total outlay in PSDP for running an effective media campaign for PSDP projects, draft of the gender policy framework, pilot research study on making public sector workplaces conducive for women and voluntary national review (VNR)”.
Discussing the “draft of the gender policy framework”, the chair emphasised the need for creating opportunities for girls and women to empower them in the process of decision-making and recognise their representation in all spheres of life.
He said the national outlook on gender was needed. The importance of gender needs to be understood across ministries and in provinces as indicators on gender are not very good. Action plans to be developed for gender programming and showing their commitment towards the is important aspect.
A yearly report on ‘status of gender’ in Pakistan will be issued by the Planning Commission. For making the workplace conducive for women reviews will be held quarterly and surveys carried out to determine progress.
Jehanzeb Khan stated that guidelines and ministry-wise sectoral guidelines should also be developed, adding that clarity is needed under various areas and the nature of projects.