Islamabad – Despite the deepening financial crisis, the Government of Pakistan has proposed an ambitious Rs 4,100 billion development plan for the next fiscal year. The plan, which is set to be approved today (Monday) during a meeting of the Annual Plan Coordination Committee (APCC) chaired by Federal Minister for Planning Ahsan Iqbal, has sparked both anticipation and criticism due to the way resources are being allocated.
While the plan prioritizes infrastructure—particularly road construction—it draws criticism for neglecting essential sectors like education, healthcare, and water management, even as water security remains under threat from neighboring India.
Focus on Road Infrastructure Driven by Political Priorities
A major chunk of the development plan appears to be focused on road construction and infrastructure development, reflecting what analysts call “politically driven priorities.” As Pakistan gears up for possible general elections in the near future, road and transport projects tend to become a key tool for electoral campaigning, as they are visible, quick-impact projects that can be credited directly to lawmakers and ruling political parties.
However, experts argue that prioritizing transport infrastructure over human development indicators like education, health, and clean water access sends the wrong signal, especially when the country is facing a deteriorating Human Development Index (HDI) and looming climate and water crises.
Severe Cuts in Water Projects Despite National Security Concerns
In a concerning move, the funding for water sector projects has been slashed by Rs 119 billion, a 45% reduction, bringing the total water budget down to just Rs 140 billion. This comes at a time when Pakistan is facing increasingly aggressive rhetoric and actions from India concerning the Indus Waters Treaty, including threats of diverting water from Pakistani rivers.
Given that Pakistan is ranked among the top 10 most water-stressed countries in the world, and given the accelerating impacts of climate change on glaciers and river flows, the reduction in water sector investment is viewed as a major strategic oversight.
Federal Assistance Projects and Large-Scale Schemes Overlooked
Another worrying aspect of the plan is the lack of prioritization for federal assistance schemes that are either near completion or have been launched with national-level importance. These include multi-sector projects involving infrastructure, energy, and urban development, which have historically relied on federal backing to see completion.
Observers warn that neglecting these schemes may lead to wastage of previous investments, increased project delays, and erosion of public trust in long-term development commitments.
Annual Plan Coordination Committee (APCC) to Set Economic Goals
The Annual Plan Coordination Committee (APCC), which comprises representatives from the federal government, all four provinces, and special regions like Gilgit-Baltistan and Azad Jammu & Kashmir, will also finalize the macroeconomic goals for the next fiscal year.
The committee is expected to approve:
- GDP growth target: 4.2%
- Inflation target: 7.5%
- Federal and provincial development outlay: Rs 4,100 billion
While the GDP growth goal appears optimistic given the current macroeconomic instability, high inflation, and IMF-imposed fiscal restraints, planners believe that improved agricultural output and expected stabilization in the energy sector could support this target.
Budget Prepared With Coalition Allies in Mind
The development plan has been finalized by a committee formed under Prime Minister Shehbaz Sharif, which includes representation from coalition partners. Sources reveal that the political demands of government allies have played a significant role in shaping the development agenda.
This political balancing act has resulted in Rs 50 billion being earmarked specifically for the development schemes of Members of the National Assembly (MNAs), a practice often criticized for being a form of political patronage rather than evidence-based planning.
Federal Share Shrinks, Provinces Get Bigger Slice of the Pie
According to the proposed allocations, the federal share in the development budget has been reduced by Rs 400 billion, while the provincial development budgets will see an increase of 28% compared to the previous fiscal year. This shift is in line with the framework of the National Finance Commission (NFC) Award 2010, which restructured fiscal responsibilities and devolved a greater share of national revenues to the provinces.
While this decentralization of funds is constitutionally required, critics argue that the federal government has retained disproportionate control over major national-level projects, thereby limiting the potential benefits of provincial autonomy.
Cuts in Education and Higher Education Budgets Raise Alarms
Another controversial element of the development plan is the massive cut in the education sector:
- Federal Ministry of Education budget: Reduced by Rs 20 billion, a 27% decrease
- Higher Education Commission (HEC) budget: Slashed by 32%, from Rs 66 billion to Rs 45 billion
At a time when Pakistan is battling declining literacy rates, widening digital divides, and a brain drain crisis, education experts say this reduction could be disastrous. Universities and public colleges already facing financial constraints may be forced to cut programs, delay infrastructure upgrades, and suspend scholarships, all of which will negatively affect the youth.
Major Water Project Also Affected: Diamer-Bhasha Dam Sees Budget Cut
The Diamer-Bhasha Dam, a flagship water storage and hydroelectric project considered essential for water conservation and energy generation, has also seen its budget reduced by Rs 5 billion, down from Rs 40 billion to Rs 35 billion. This has raised concerns that the dam’s construction timeline could face further delays.
With Pakistan’s per capita water availability dropping sharply over the years and energy needs climbing, projects like Diamer-Bhasha are critical. Reducing allocations at this stage could lead to escalating project costs and unintended delays, which may also affect investor confidence and foreign funding support.
Development Budget Utilization Remains Critically Low
Adding to the concerns is the low budget utilization for the ongoing fiscal year. Out of the Rs 1,400 billion allocated for development in the current year, only Rs 596 billion (43%) had been spent by the end of May. This points to either administrative inefficiency, bureaucratic delays, or lack of project readiness.
This underutilization raises red flags about the actual execution capacity of federal and provincial departments. Experts stress that allocating massive budgets means little if the implementation mechanisms remain weak and plagued by red tape.
Conclusion: Ambitious on Paper, Lacking in Vision?
Pakistan’s proposed Rs 4,100 billion development plan for the upcoming fiscal year presents an ambitious blueprint, but its execution strategy and priorities have raised valid concerns. The disproportionate focus on roads and politically charged projects, coupled with severe cuts to education, healthcare, and water security, suggests a short-term political agenda rather than a long-term development vision.
As the APCC meets to give final approval, many are hoping that revisions will be made to ensure that essential human development sectors receive the attention and funding they desperately need. For a country already navigating complex economic, environmental, and geopolitical challenges, this development budget will play a crucial role in shaping its future.
