HE slow pace of development spending shows how public investment continues to bear the brunt of efforts to create a primary fiscal surplus, while wasteful government expenditure remains largely protected. The numbers speak for themselves. The government spent just 10.4pc of the Rsitr PSDP allocation during the first four months of the current year. Even against the Rs412.3bn authorised for spending, actual utilisation remained exceptionally low. Several ministries could not spend even a single rupee. This pattern is hardly new. Successive governments have routinely sacrificed development spending to meet fiscal targets, particularly under IMF programmes. The lender’s strict conditions on fiscal deficits and primary balances leave little room for development works. They find it easier to delay development than to confront politically influential lobbies, reduce administrative waste, or cut their own privileges.
Public investment becomes the easiest adjustment whenever revenues fall short.
The current figures, however, should not be mistaken for the final spending position. Disbursements are likely to accelerate as the fiscal year progresses, particularly towards its closing months.
Such hurried spending reflects poor planning and weak project preparation. Governments announce ambitious development allocations for political reasons without ensuring that projects are ready for implementation. The result is a rush to spend towards the end of the year, often at the expense of quality and value for money. The underlying problem is equally clear. The government has failed to broaden the tax base and raise the tax-to-GDP ratio, which has for long hovered around 10pc or lower. Without a stronger revenue base, there is little money available for development. The burden of financing the state continues to fall on a relatively narrow segment of taxpayers, while large sections of the economy remain outside the tax net. A fiscal surplus has little meaning if it is achieved by starving the economy of investment. Public infrastructure is essential for raising productivity and improving living standards. Its neglect creates higher costs for future generations. The government must raise more revenue by broadening the tax net. It must also examine its own non-development expenditure and cut wasteful spending.
The country needs a revenue system capable of financing growth, not one that repeatedly makes investment its first casualty.