Govt to Cut Development Budget by 50% During Current Fiscal Year

The government is likely to impose more than a 50 percent cut on the developmental budget of some Ministries/Division, with low utilization for the ongoing fiscal year, followed by the downward revision of the PSDP 2021-22 allocations by Rs. 200 billion.

It has been decided that there will be no cut on the AJK, GB, Ex-FATA allocations, projects near the completion stage, or the projects with high utilizations, an official source told the scribe. However, drastic cut has been proposed for the slow-moving projects with less utilization, the source added.

The PTI government had downward revised the rupee component of the PSDP allocations by Rs. 200 billion from Rs. 800 billion to Rs. 600 billion. The total federal development outlay for FY 2021-22 was Rs. 900 billion, which included Rs. 800 billion component and Rs. 100 billion Foreign Exchange component. Due to capacity problems, the ministries/divisions have failed to utilize a major portion of the allocated funds, which resulted in the imposition of cuts on PSDP by the previous government.

The source said that the Ministries/Divisions have been asked to provide the details of the expected utilization and savings. The utilization of some ministries/divisions is less than 5 percent of the allocations during the first three-quarters of the current fiscal and the projects of these ministries/divisions will face huge cuts.

For example, the Ministry of Interprovincial coordination has utilized only Rs. 167.91 billion, which is around 4.5 percent of the allocations of Rs. 3.735 billion, the source said and added that with the current pace of utilization it can hardly utilization around 10pc of the allocated funds. Similarly, the National Heritage and Culture Division utilized only Rs. 6.53 million, which is 5.2 percent of the allocations of Rs. 125 million.

Petroleum Division utilized Rs. 340.69 million, which is just 10.5pc of the allocated Rs. 3.250bn for the current fiscal. The Science and Technological research division utilized only 11 percent of the allocated funds during the first nine months of the current fiscal. Out of the total allocations of Rs. 8.341 billion the division utilized on Rs. 931.14 million.

The Planning Ministry utilized only 37 percent of development funds during the first nine months. Out of the total allocations of Rs. 10.815 billion, the Planning Ministry utilized Rs. 4.037 billion. Climate Change division utilized only Rs. 5.807 billion of the total allocated amount of Rs. 14.327 billion. Industries and Production Division incurred an expenditure of Rs. 336.75 million against the allocations of Rs. 2.916 billion. Higher Education Commission utilized only 15.235 billion against the allocations of Rs. 40.450 billion.

The utilization of some of the ministries/divisions is on the higher side, and therefore, they will face small cuts or maybe no cuts, the source said. For example, the Railway Division has utilized around Rs. 17 billion against the allocations of Rs. 26.908 billion.

Pakistan Atomic Energy Commission has utilized Rs. 17.608 billion against the allocations of Rs. 27 billion, which means the cut will be less on the projects of the PAEC. Similarly, the Water Resource Division utilized around Rs. 56.249 billion, which is 61 percent of the allocation of Rs. 91.713 billion.

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