ISLAMABAD : The National Economic Council (NEC) which met here Monday under the chairmanship of Prime Minister Syed Yousuf Raza Gilani approved Rs. 541 billion for the Public Sector Development Programme 2008-09 more than 11 percent of the last fiscal year and also set a GDP growth target of 5.5 percent for the financial year 2008-09.
Later, Deputy Chairman Planning Commission, Salman Faruqi briefed the newsmen at a press conference, about the decisions of the NEC, the country’s highest financial forum, which approves the economic outlay and reviews the macro-economic performance of the country.
He said that the total size of the PSDP for the financial year 2008-09 is Rs. 541 billion in which the share of federal PSDP is Rs. 371 billion, which is 11.5 percent of the PSDP. The provincial PSDP is Rs. 170 billion while the allocation for the Earthquake Reconstruction and Rehabilitation Authority (ERRA) is Rs.27 billion which is over and above the PSDP 2008-09 of Rs. 541 billion.
Secretary Information Akram Shahedi, Principal Information Officer (PIO) Ghulam Huzur Bajwa were also present in the meeting.
Salman Faruqi said that the NEC was attended among others by Provincial governors, Chief Ministers, Federal and Provincial Ministers, Federal and Provincial Secretaries and Governor State Bank of Pakistan.
He added that the NEC has set a GDP target of 5.5 percent which is realistic and achievable and it could be even grow higher depending upon the economic situation of the country.
He regretted that in the past including the outgoing financial year the Public Sector Development Programmes were not properly implemented against the allocations announced in the Budgets but also did not release them.
“We fear the prices specially the prices of oil and food are increasing worldwide while an international economist has termed it as a ‘Silent Tsunami’ while another economist has written it as ‘Inflation is back.’
He further said that this increase in the prices can also impact our economy badly and added that government is providing Rs. 380 billion annually only in terms of subsidy for our people.
Mr. Faruqi said that it means that government is providing subsidy of Rs. 150 million on daily basis due to increase in the prices of food and oil.
He added that when the prices of oil is increased at international level, it is the worldwide practice that the prices are adjusted according to the increase at international level.
Deputy Chairman Planning Commission, Salman Faruqui said that to benefit the common man and protect him from the rising oil prices it was a common practice in our country that its prices should not be increased.
He regretted that instead of benefiting the poorest of the poor and common man the affluent class took advantage of the privilege.
He said that now the government has changed its policy
and the subsidy would be provided to the poor segments of the
society and according to their needs in terms of cash grant, health insurance and
subsidies and income .
The Deputy Chairman Planning Commission said that in this regard a detailed policy announcement would be made in the next couple of days for the benefit of the poor segment of the society.
He said Shaheed Mohtarma Benazir Bhutto had cherished desire in her life for socio- economic empowerment of women and that they be given equal rights being enjoyed by men in the country.
He added that in this regard female in the country would get equal rights to men in the form of subsidies and privileges.
Salman Faruqui added that during the NEC meeting it was decided that the allocation for the next PSDP (2008-09) will be higher than the previous allocation.
He said that the people have pinned high hopes on the newly elected government and its coalition partners. They have made promises to the people and to accommodate them the government needs a bigger PSDP for the next financial year (2008-09), as compared to the outgoing financial year.
He said that was why the government has approved a PSDP of Rs. 541 billion for the financial 2008-09.
Deputy Chairman Planning Commission Salman Faruqui, said that the NEC has set 5.5 percent GDP target for the next fiscal year.
Faruqui said the next year growth target was based on realistic projections, as the government thought it should give the estimates that were credible.
The previous government initially set 7.2 percent for the GDP growth in the outgoing fiscal year, ending on June 30, but revised it later to below 6 percent citing poor growth in farm and manufacturing sectors.
For the next fiscal year, the NEC has set 4.4 percent growth target for the agriculture sector and 6.6 percent for the large-scale-manufacturing.
In the 2007-08 fiscal year, agriculture sector growth turned out to be 1.5 percent against the target of 4.8 percent, while manufacturing sector grew by 5.4 percent against the target of 10.9 percent.
The Deputy Chairman expressed the hope that policies the government plans to follow in future will revive traditional growth rate in the agriculture sector and the steps taken for industrial revival will improve growth in manufacturing.
“It will be our efforts to increase the GDP growth beyond the set target,” he added.
In the outgoing year, the services sector performed well with 8.2 percent growth, exceeding the target of 7.1 percent.
Total investment as a ration to GDP declined from 22.9 percent in 2006-07 to 21.6 percent in 2007-08. Foreign private investment in the first ten months to April amounted to $3.6 billion against $5.3 billion during the same period last year.
For the next year, total investment as a ratio to GDP is projected to be 22.4 percent, out of which 71 percent would be financed through domestic resources and remaining 29 percent from external resources.
The Deputy Chairman earlier told the NEC that the economic problems which the new government faced stemmed to a large measure from a combination of some “flawed” policies or “inaction”.
“We have inherited a very difficult economic situation with all macro indicators confirming an economy on the down turn.”
The Deputy Chairman said there was no adequate protection or safety net measures available for the poor.
“This is also the result of inaction by not adjusting domestic prices to international changes while protecting the poor,” he said and added that it was this neglect that has now posed a major economic challenge to the present government.
He said previously the growth was led and sustained by increasing consumption and indicators of economic success were measures in terms of increasing consumption - number of cars, air conditioners, mobile phone etc.
In its future strategy, the Chairman said that the major approach would be to adopt “people centric” development policies that meet the aspirations of the people such as jobs, food, housing and social safety net etc.
The Deputy Chairman listed five main priorities the government would like to achieve through the PSDP programme.
These included providing a comprehensive safety net against severe hardship faced by the poor and vulnerable groups, and overcoming the energy and water crisis in a planned and systematic manner.
Another priority of the government would be the development and uplift of Baluchistan and NWFP and special areas (FATA, AJK, Northern Areas).
The development budget would also focus on reviving growth in agriculture and manufacturing so as to overcome food shortages and generate vitally needed incomes and employment.
Building up human resources at all levels of education including technical education will also be among the priorities of the PSDP.
The total size of Rs. 541 billion, which is 11.5 percent higher than the last year, includes federal PSDP of Rs, 371 billion and the Provincial PSDP of Rs. 170 billion.
The allocation for ERRA is Rs. 27 billion, which is over and above the PSDP 2008-09.
Of the total PSDP allocation, the social sectors have been allocated Rs. 188 billion, which is 12 percent higher than last year and 51 percent of the total.
Infrastrucrue has been allocated Rs. 166 billion which is 45 percent of the total development spending.
Power sector has been allocated Rs, 14 billion which is over and above Rs. 51 billion to be spend by WAPDA from its own resources.
Water sector has been allocated Rs. 75 billion or 20 percent of the total, while food, agriculture and livestock has been earmarked Rs. 20 billion.
Transport and communication sector has been allocated Rs. 61 billion or 16.4 percent of the total PSDP.
Higher education has been allocated Rs.18 billion while Rs. 23.3 billion, which is 10 percent higher than last year, has been earmarked for special areas - AJK, Northern Areas and FATA.
The Deputy Chairman said that government was giving the highest priority to overcoming energy and water shortages on a war footing.
In this regard, he said that a comprehensive long-term Energy Strategy is being prepared on the Prime Minister’s instructions.
“We have planned to end load-shedding by December next year and hopefully even before by August 14, 2009,” he told the NEC meeting.
He said a concerted thrust has been initiated for Thar Coal Development with an International Roundtable conference being proposed later this month with the World Bank support.
He said it has been proposed to set up an integrated Thar Coal Development Board under the chairmanship of Sindh Chief Minister, Sindh.
An amount of Rs. 1 billion has been proposed, including matching grant by the government of Sindh for Thar infrastructure, he added.
The Chairman hoped to start international road shows followed by open public bidding for integrated mining and power generation projects by the end of the year.
He said the a revamping of the Alternative Energy Development Board has also been proposed and the concrete results would be out soon.
Faruqui said that a major allocation of Rs. 10 billion for small dams has also been proposed which will enhance the share of hydel power generation.
He noted with pleasure that the Planning Commission is making steady progress on preparatory work for starting the actual construction of Bhasha Dam.
The Planning Commission has proposed Rs. 75 billion or 20 percent of total PSDP for the water sector, he added.
Deputy Chairman Planning Commission Salman Faruqi highlighting the measures taken by the government for the development of water and energy sectors said government is giving high priority to these sectors for overcoming energy and water shortages on war footing.
He added that at the heart of PSDP 2008-09 are the Prime Minister’s initiatives which would ensure that priorities set by the government are implemented and monitored at the highest level.
The main elements’ of the government initiatives included programs for poverty alleviation and an allocation of Rs.34.0 billion for Income Support Fund, for employment and skill development allocation of Rs.2 billion for Hunarmand Pakistan and allocation of Rs.10.0 million for Placement Bureau.
He further said that for rural development an allocation of Rs.500 million for white revolution, Rs.500 million for Village Product Specialization, and Rs.10 million for Cold Chains have been approved by NEC.
Salman Faruqi added that in the health sector the number of Lady health workers would be doubled and additional amount of Rs.3.5 billion per year would be allocated while expansion and Upgradation of Basic Health Units (BHUs) Rs.500 million have been approved by NEC.
Faruqi said that under the provision of Housing for all a Revolving Fund of Rs.10 billion have been approved by the NEC adding said that for the Real Estate Investment Trust Rs.300 million have been approved foor improving governance, the NEC has also approved Rs.100 million for Video Conferencing facilities and Rs.100 million have been approved for promoting paperless governance by the NEC in the PSDP 2008-09.
The Deputy Chairman Planning Commission said that the government has listed five main priorities of the PSDP 2008-09 included providing a comprehensive safety net against the severe hardship faced by the poor and vulnerable groups, overcoming the energy and water crisis in a planned and systematic manner, giving the highest priority to the development and uplift of Balochistan and NWFP and special areas (FATA, AJK and Northern Areas).
He added that other priorities are reviving of growth in agriculture and manufacturing so as to overcome the food shortages and generate vitally needed income and employment to the people and building up of human resources at all levels of education including the technical education.
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