Punjab Vision 2020

PUNJAB’S VISION 2020

PRE BUDGET POLICY ADDRESS

OF

CH. PERVAIZ ELAHI

CHIEF MINISTER, PUNJAB

June 15, 2004

Punjab’s Vision 2020 (i)

TABLE OF CONTENTS

PAGES

INTRODUCTION 1 - 2

VISION 3

BROAD-BASED LONG TERM STRATEGIES 4 - 7

MEDIUM TERM STRATEGIES 7 - 15

AGRICULTURAL SECTOR 8 - 9 THE MANUFACTURING SECTOR 9 - 13 MINERALS AND NATURAL RESOURCES 13 SERVICES 14 - 15

LINKS WITH LAST YEAR’S POLICY STATEMENT 15 - 37

GOVERNANCE REFORMS 15 -22

Management of Politics 16

Devolution and Local Governments 16 - 17

Access to Justice 17 - 19 (Judiciary, Police, Jails)

Civil Service Reforms 19 - 20

Accountability 20 - 21

Information Technology 21 - 22

SOCIAL SECTOR INVESTMENTS 22 - 30

Education 22 - 27 (Elementary Education, Higher Education, Special Education)

Health and Population Welfare 27 - 30

PUBLIC HEALTH (Water Supply and Sanitation) 30

DIRECT INTERVENTIONS FOR POVERTY ALLEVIATION 30 - 34 (Population below poverty line)

Zakat 32 - 33

Bait-ul-Maal 33

Micro-Credit through Punjab Rural Support Programme 34

Punjab’s Vision 2020 (ii)

Access to Physical Assets 34 (Land to Landless, Shelter to the Shelter less) SOCIAL WELFARE 35

MINORITIES 36

WOMEN DEVELOPMENT AND GENDER REFORMS 36 - 37

ECONOMIC GROWTH STRATEGY 37 - 49

AGRICULTURE 37 - 41

Extension 38

Research 39

Marketing 39 - 40

Credit Availability 40 - 41

IRRIGATION 41 - 44

LIVESTOCK AND DAIRY DEVELOPMENT 44 - 45

ENABLING ENVIRONMENT FOR ENTREPRENEURS 46 - 47 (Industrial Development and Labour Reforms)

HOUSING AND CONSTRUCTION INDUSTRY 48

DEVELOPING COMMUNICATIONS NETWORK 48 - 49

GOVERNANCE REVISITED 49 - 55

REFORM OF PLANNING AND IMPLEMENTATION PROCESSES 49 - 51

PUBLIC SECTOR DEVELOPMENT INVESTMENT 50

SECTORAL POLICIES 50 - 51 (Social Sectors, Urban Services, Economic Infrastructure)

IMPLEMENTATION AND MONITORING 51 FISCAL AND FINANCIAL MANAGEMENT 52 - 55

CONCLUSION 55

PUNJAB’S VISION 2020 PRE BUDGET POLICY ADDRESS OF

CH. PERVAIZ ELAHI, CHIEF MINISTER, PUNJAB

June 15, 2004

Ladies and Gentlemen of the Media!

I accord you my warmest welcome.

Last year, on the eve of the Budget 03-04, I had issued a policy statement

in which I had expressed the vision of my government. You may recall that in my

policy statement I had stated that reform was a continuous process and the best

of reform agendas needed to undergo a process of change through consultative

process. This year’s policy statement builds upon and vastly expands our past

policy initiatives.

Last year I had introduced the concept of a medium term budgetary

framework (MTBF) that involved developing a vision and a three year rolling

strategic plan for the development of the Punjab combined with a plan for

enhanced services to the citizenry of the Punjab. Last year’s budget was the first

year of the plan. In sharing our economic vision with you today, I would also give

the highlights of our performance and achievements during the out going

financial year.

Over the years and particularly during the last year and a half I have

visited every nook and corner of the province and have met a vast cross section

of the people. Our province with a population of over 80 million people is clearly

the nerve center of the country. Punjab has a culture of relative progressiveness

that is reflected in our agriculture, industry, services and every day life. Our

people are industrious, friendly and moderate. We have a long history of

craftsmanship and creativity. To top it all there is a great desire in our people to

improve their lives, their province and their country. It is my firm belief that if

Punjab grows and prospers, so will the other provinces. If Punjab is in the

doldrums it can drag the rest of the country down.

Punjab’s Vision 2020

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Everywhere I go in the Punjab people are clamoring for development and

progress, they want good education facilities and a sound future for their

children, they want good infrastructure for their communities and they want Jobs;

meaningful, permanent and productive Jobs. It is quite clear that the people of

Punjab are willing to sacrifice today for a happier tomorrow; they will support any

government initiative that takes the province on a sustained path of growth and

prosperity. In fact, the people of Punjab wish that Punjab should be the role

model for development. We must show to the rest of the country how to achieve

a quantum jump in development and promote rapid economic growth to pull our

province and the rest of the country out of its entrenched poverty. By our own

efforts and home grown policies we shall provide a golden future for our people

and at the same time restore our national dignity and sovereignty in the comity of

nations. It is my firm belief that our people deserve nothing less.

Punjab is truly blessed with a huge agriculture resource with a great

untapped potential. Its land, water, weather and people if harnessed properly

can yield large gains and lift the country out of its poverty. It’s human resources

can lay the foundation of high value addition not only in agriculture but also in

industry and services. Unlike some mineral rich areas of the world Punjab has to

rely on the brain power of its people for growth. Nature has therefore ensured

that if Punjab has to develop it has to develop its people which are its greatest

resource. It has to take the ‘intelligence’ path to development rather than rely on

the commodities path (mineral and non-mineral) to development. This in itself

represents a great potential as the past 100 years of global manufacturing has

demonstrated that while value of commodities have declined world wide growth

in per capita value addition based on skilled human resources has grown

exponentially.

The task is challenging and would need a sustained effort over a long

period of time. But first, we need to spell out a vision for Punjab as the largest

province of the country.


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VISION 2020

The vision for Punjab, that I believe, every citizen yearns for is a vision of

relentless pursuit of modernization, innovation, confidence and tolerance. The

province has to lead the country into the twenty first century. This vision would

mean that fifteen years down the road, by 2020, Punjab would be a fully literate,

fully employed, highly educated, skilled, talented, tolerant, culturally

sophisticated, internationally connected, and a reasonably well off healthy

society. It will have an excellent education system, thriving and competitive

markets, strong internationally competitive companies, world class infrastructure

with modern urban centres, a high value adding agriculture sector and a smart

small and efficient government - An economy with significant presence of

international investors and a per capita GDP in excess of US$ 2000. This

implies that we will double our GDP every eight years or so. This in turn means

that Punjab will grow its per capita GDP by over eight percent a year.

This is a tall order particularly when the levers of development are not

entirely in the hands of the provincial government. The federal government plays

an extremely important role. It is totally in-charge of fiscal and monetary policies;

it frames the tax policies, trade policies and also plays an important role in the

regulatory environment of firms and companies. This means that federal policies

have to be conducive to provincial development. Fortunately, the federal

government has recently been able to bring about a good measure of

macroeconomic stability to the country. The provincial development also

depends on key federal structural policies such as trade, tax and regulatory

policies that are conducive to a positive investment climate in the country.

However, macro-economic stability by itself is not enough! Time has come to

fully take advantage of federal policies for promoting the investment climate in

the provinces. We will provide the needed push but it is quite clear that

development of a province critically depends on close federal-provincial

partnership.


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BROAD-BASED LONG TERM STRATEGIES

What strategies can the Punjab government adopt to move towards

the vision spelt out above? Basically the Punjab government would need to

develop a comprehensive set of strategies in several broad areas as listed

below:

1. Develop an urban strategy. 2. Develop a rural strategy. 3. Develop a human development strategy. 4. Develop a physical infrastructure strategy. 5. Develop a cluster development strategy. 6. Develop a provincial regulatory strategy. 7. Develop a development funding strategy.

The proposed Punjab development strategy revolves around the twin

strategies of urban and rural development. Large cities tend to be most

productive parts of any society. The urban areas are a major source for new

ideas, innovation and commercial activities. They tend to have higher incomes

due to the concentrations of firms, labor and product markets, production

centers, sub-contracting and industrial clusters, and linkages to international

markets. Punjab is blessed with large cities like Lahore, Multan, Faisalabad,

Gujranwala, Sialkot, Rawalpindi and many others, that can be the magnet of

growth for the surrounding rural areas. Each city has its characteristic

competitive advantages that need to be greatly magnified with a quantum jump in

deployment of resources and effort. This means that urban institutions of

currently mediocre standing need to be developed into world class institutions.

Urban infrastructure deficit has to be removed, planning has to orient towards

facilitating the cities to become more efficient living and production areas. The

major urban population centres need to be connected by high speed highways

and rail links. The urban areas are the homes of the industrial firms and in the

words of Alfred Chandler of Harvard University, “a nation’s economic growth and

competitive strength rest on more than natural resources, labor and managerial

skills, available capital or even the size of internal markets. The wealth of

nations during the last hundred years has been based on the ability of

industrial enterprises to adopt and to develop technologies and to devise


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administrative structures to co-ordinate the processes of production and

distribution.”

Punjab has many large industrial concentrations. Notable examples are

textiles, leather and light engineering goods. There are major clusters in these

areas. A coordinated effort to provide support to these areas to form world-class

clusters can have a dramatic impact on Punjab’s competitiveness in world

markets. This would require development of industrial enclaves around these

clusters where reliable and adequate infrastructure would be provided, law and

order would be assured and interference from government inspection machinery

would be minimized. Assistance in inducting new technology, provision of world-

class engineering and training programs and assistance in information

generation on world markets and trends could be provided. Punjab could set the

objective of becoming a major player in the world in these industries.

The rural strategy has to be built around the key strengths and

advantages at the district level. Each district needs to assess its comparative

advantage for value added crops and agro-based industry. Rural development

has to be pushed by much greater levels of high value products in agricultural

output based on provision of technological and process improvements, creation

of rural markets, providing ready access to micro-credit, provision of cool chains

and storage facilities, transport facilities and road networks connecting producers

to markets. The vast irrigation network of the Punjab can be a major source of

competitive advantage for the Punjab by vastly improving its efficacy and reach.

We have to switch our focus from a production strategy of self sufficiency in food

production, to a strategy where we fully exploit the potential of high value added

agricultural products and livestock development while maintaining strategic

reserves of essential food grains. The adoption of this strategy could multiply the

returns to the farmers of the Punjab and boost the GDP of Punjab manifold.

The human development strategy must be integrated with the urban and

rural strategies. Along with the health policy, an education policy is a key

ingredient in the human development strategy. Universal primary education


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including adult education has to be put on a fast track with full commitment and

resources of the provincial government behind it. We need world class schools,

vocational training institutes and engineering universities that can provide a

steady stream of outstanding and practical engineers to feed into the industrial

clusters. Agriculture needs agriculture universities that make a difference. Years

of neglect need to be reversed. Entrenched vested interests need to be

removed. International collaboration and faculty assistance would have to be

tapped. Just tinkering with existing policies won’t do. Major improvements have

to be made. If our products have to compete in world markets, our students and

workers have to have an even playing field, they must be provided with at least a

minimum standard of knowledge based on modern curricula and effective

teachers.

While federal institutions are majors players in providing physical

infrastructure like power, telecommunications, highways and transport etc. the

Punjab government can play an important role in provision of urban and rural

infrastructure like water and sewerage, urban, rural and intercity transport

systems and even electric power. Developing a framework in which the private

sector can provide the infrastructure at a reasonable price and quality would be

one of the main areas of future development.

The Punjab government would have to reinvent itself and learn to become

a real partner with the private sector. This would require minimizing its regulatory

and control role; creating one window operations where possible, eliminating

laws that no longer make sense and enforcing regulation in a light-handed

manner. Such light handed regulatory environment has been created by many

countries and the Punjab government needs to take a close look at its own

regulatory structure and processes to bring it close to international best practices.

Finally the government needs to have a development funding strategy.

The traditional funding from budgetary allocations is not going to keep pace with

the requirements for Punjab’s future development strategy. Innovative financing

strategies outside the budget particularly for urban projects can be developed to


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add to the budgetary resources. User charges and dedicated taxes for specific

purposes can be developed. The people of Punjab would be willing contributors

to the development effort through enhanced compliance with tax laws and

collection procedures if the quality of services provided to them improved

significantly. We on our part will guarantee that every rupee collected as taxes

will be accounted for and spent on the provision of essential services and

development of the province.

MEDIUM TERM STRATEGIES

While the vision and the broader long term strategic game plan provides

good guidance for future activities, we must translate this into a medium term

action plan that can be undertaken from this year onward for the next three

years. In the medium term your government has decided to focus on poverty reduction as a prime goal. It will be our overarching objective to improve the lives of people by improving their incomes and improving the delivery of public services. This twin objective requires that we significantly enhance the capacity of the economy to create jobs on the one hand and improve the state capacity to deliver public services on the other.

It has been estimated that if the growing trend of poverty and

unemployment in the Punjab has to be reversed, then the Punjab economy has

to create at least one million new, sustainable and permanent jobs every year.

This will require that the job creating capacity of the economy will have to be

doubled compared to the recent past. In terms of GDP growth this would require

an annual GDP growth in excess of 7 percent. This is well in line with the growth

rates achieved by other high growth countries but it has so for eluded us. I

believe that our macroeconomic stability provides us with a great opportunity to

achieve these high growth rates provided we considerably improve our

institutional and technological standards and frameworks in the Punjab. As a

target I have instructed that 15 percent of the new one million jobs be

created in the public sector by filling gaps in areas where public service

delivery is deficient. The rest will have to be generated by the private sector.


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Our role in the government would be to provide an environment conducive to the

private sector to flourish and grow in the Punjab and create the required jobs.

The economy of Punjab rests on four pillars:

1. Agriculture 2. Manufacturing 3. Services 4. Minerals and natural resources

It will be our endeavor to jump start each area and set in place policies

and strategies that ensure that we fully exploit our potential in each of these

areas.

AGRICULTURAL SECTOR

We have to bring our agricultural sector into the 21st century. As an

objective I want our agricultural sector to transform itself from a traditional

producer of basic food grains and raw materials for domestic markets, to a sector

that excels in value added crop production for international markets and adds

value to raw materials through agro based industries. This transition will have to

be based on top quality agricultural research, provision of top quality input

package (at the right time), provision of top quality distribution and marketing

infrastructure. To meet these objectives we plan to take the following medium

term initiatives:

• Increase Public investment in Agricultural research Extension services Irrigation facilities Water management Forest development

• Promote private sector investment in

Livestock breeding Veterinary services Seed technology Agricultural services

• Modernize Wholesale markets Establish new chain of wholesale markets


Reform market regulations Improve market infrastructure through public private

partnerships Promote development of appropriate cool chains. Establish grading and testing facilities Enforce food safety regulations in line with international

standards

• Exploit competitive advantage of each district Develop profile of agricultural potential of each district Develop potential of agro-based industry for each district Support regional agricultural and agro industry development

strategies Establish fund for research and proto-type development

projects

THE MANUFACTURING SECTOR

With the passage of time the manufacturing sector will become the

dominant sector in the economy of the Punjab. I believe that after the textile

industry we have to move on to the higher value adding engineering industry.

This industry is labor intensive and can literally create millions of much needed

jobs. It is for this reason we have decided to develop a light engineering triangle

(The Punjab Engineering Triangle) as a prototype for development of other

clusters. This cluster is located north of Lahore and comprises the cities of

Lahore, Gujranwala, Gujrat, Wazirabad, Daska and Sialkot.

The close location of thousands of

enterprises in a relatively small area gives

us the opportunity to develop the entire

area based on economies of scale. The

entrepreneurs in the area are extremely

dynamic and I am sure we have a very

sound basis for public private partnership

Figure. 1

t

a

e

Gujranwala

Sialkot

This area has

program of upgradin

Lahor

Dask

Gujra

in developing the Punjab Engineering
The Punjab Engineering Triangle
9

Triangle as an engineering cluster.

already created a critical mass of manufacturers. A

g the entire industry to achieve technological, design,


10

manufacturing, management and marketing capabilities is needed. This would

enable us to meet the challenges of a much greater liberalized trade regime in

both domestic and foreign markets and can be very cost effective and beneficial

for the industry, the province and the country. The Punjab Engineering Triangle is

ready for a “catch-up competitiveness” program. Postponing this program may

jeopardize the viability of this great concentration of engineering (potential)

capabilities due to relentless competition from across the border once SAARC

related free trade areas come into being.

While the macroeconomic framework, trade and tariff policies and the

overall legal framework are in the domain of the federal government, the

provincial government can play a major role in creating the ability in our people to

engage in “catch-up competitiveness” by absorbing, adapting and improving on

the technologies that underpin new products, services and processes. Catch-up

competitiveness in each part of the engineering value chain depends on

entrepreneurship, high quality educational provision and market-friendly

institutions and infrastructure. The provincial government’s role in this effort will

have the following four dimensions:

1. Create effective institutions for developing technological skills and design capabilities:

This would require a major human resource development program

based on creation of high quality technical universities,

polytechnics, vocational training institutes and funding for technical

training in foreign institutions. In the context of the Punjab, the

Government of Punjab has decided to establish a university in the

Punjab Engineering Triangle. We will turn this university into a

technical and management university based on the model adopted

by China, Singapore and other East Asian countries. These

countries have created world class technical universities, recruited

international faculty and conduct research and development to

assist their manufacturers in innovation and improvements in

design, process and management. The Government of Punjab


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would seek collaboration of one of the great manufacturing nations

of the world (Germany or Japan) along with donor and World Bank

support to develop this University to meet the requirements of the

Punjab Engineering Triangle.

Similarly through TEVTA and collaboration of some industrialized

country institutions, model vocational training institutes and polytechnics would

be located in the triangle. Finally the Punjab Government would establish with

the participation of the stakeholders a skill development fund for training of

engineering and technical personnel in local and foreign institutions.

2. Provision of high quality Physical infrastructure:

This infrastructure would include the establishment of Export

Processing Zones, industrial parks, communication networks

(Roads, rail etc.) providing quick link to the new Lahore Airport,

building and upgrading highways within the triangle and upgrading

highways to India. Improving infrastructure for existing clusters and

helping them move to new industrial parks and the EPZ.

3. Provision of High Quality common facilities:

This would require setting up of research and testing facilities,

starting environmental protection initiatives and projects, setting-up

of quality standards and creation of technical and marketing

databases. This would require establishment of new institutions as

well as opening up of branches of existing institutions.

4. Creating an image and marketing of the Punjab Engineering Triangle:

The objective would be to attract domestic and foreign investment

into the triangle. Promote relocation of engineering industry from

the industrialized countries to the triangle and assist local clusters

in establishing links with global value chains. This activity would

also tie in with federal government initiatives and interventions for


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investment promotion. The Punjab industries department will be

revamped to provide the necessary administrative support.

5. Implementing “Catch-up Competitiveness” in the Punjab Engineering Triangle:

Implementing the catch-up competitiveness program in the Punjab

Engineering Triangle would tax the abilities of the Government of

Punjab and would need total commitment from the top hierarchy of

the Government for success. I will take personal responsibility for

developing this innovative development effort and ensure that the

entire government will put in its best effort. The project can be a

major source of growth not only for the Punjab but for the entire

country as linkages between the triangle clusters and the rest of the

country would have a multiplier effect for the entire economy.

To effectively implement the program an organizational structure

would have to be created that can formalize the vision of the project

into a series of development projects and proposals that can be put

through a fast track approval and budgetary process and

implemented by the implementing agencies of the Punjab

Government. For this purpose an overall development board,

called the Punjab Engineering Triangle Development Board comprising ex-officio and private sector members under my chairmanship will be created. Similar effort will be needed for the

other industrial and city clusters and similar setup would be created

at the appropriate time.

The Main features of our (other) initiatives are as follows:

• Promoting the development of clusters through public-private partnerships

The Light Engineering cluster in the Lahore, Gujrat and Sialkot Triangle

The Leather cluster (Kasur/Sialkot) The Textile cluster (Faisalabad, Lahore)


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The Cotton and Ginning Cluster (Multan, RY khan) The Furniture cluster (Gujrat, Jhelum, Rawalpindi) Other City clusters development

• Improving Business Climate for firms

Rationalization and reduction in taxes Rationalization of labor laws to promote employment Revamping Industrial Regulations including inspections

relating to boilers, buildings, electricity etc.

MINERALS AND NATURAL RESOURCES

While clearly our human potential is our biggest asset and we are focusing

on it as our key success factor, exploitation of the province’s mineral and natural

resources will also play a significant role in generating income and employment

opportunities for our people. We already have a base of mineral activity in the

province involving oil and gas, natural chemicals, rock salt, coal and iron ore etc.

We need to vastly expand our activities in this vital area. The mineral and natural

resource strategy would have three components:

1. Exploration 2. Development 3. Marketing

The basic strategy would be to promote the private sector to actively

participate in this critical sector. The Punjab government will rationalize the

existing laws and regulations to remove all impediments in attracting investment

in the sector. We will establish a development fund that can be tapped by the

private sector for purposes of mining activities. However, a lot of work needs to

be done in this sector and the independent Mines and Mineral Development

would need to energize itself to develop an action plan for promoting this sector.

Currently this sector contributes less than 2% of Provincial GDP.

The vast water ways in the Punjab are our natural resource that provides

us with an opportunity to harness the power potential of these flows and generate

cheap electricity for our rural communities. A comprehensive power development

program is being prepared.


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SERVICES

Services contribute more than 50% towards the Provincial GDP and there

is great potential to create jobs in the services sector. The current annual growth

in this sector is 4.5% while it can easily reach double digit levels. This sector

comprises the booming housing and construction industry, wholesale and retail

trade, transport storage and communication, tourism, hotel industry and resorts.

This sector would require the following policy interventions:

• Stimulate Job creation in the construction and housing industry

Rationalization of stamp duty Rationalizing commercial zoning regulations Rationalizing development charges Rationalizing rent restriction ordinance Promoting construction of properties for rental purposes

• Boost tourism, hotel and resort development for income generation and employment

Development of tourist resorts Promotion of hotel chains Promotion of entertainment industry Development of theme parks General promotion of tourism

• Improving communications and transport services

Improving inter city and urban transport Improving and modernizing urban and rural road networks Developing mass transit networks for mega cities

• Promoting wholesale and retail trade

Developing urban commercial centres Developing linkages between urban and rural marketing

networks Providing marketing linkages between micro-credit based

activities and larger marketing network

Ladies and Gentleman, I have outlined above an ambitious vision, and a

challenging long and medium term development strategy. I firmly believe that

this is very much achievable knowing very well the talent, hard work and

determination of our people. I am sure that with the full support of the people we


15

will be able to turn our dreams into reality. The only thing required is to believe in

ourselves and dedicate ourselves to the task at hand.

LINKS WITH LAST YEAR’S POLICY STATEMENT

The long term and the medium term vision and strategy enunciated above

is firmly rooted in our continuing policy interventions which I highlighted in my

policy statement, last year. We have made great progress towards our goals set

in the last policy statement and we feel confident that as we complete major

programmes initiated last year we shall initiate new programmes that will be built

on our past success.

Our vision of 2003-04, spread over a three year Medium Term Budgetary

Framework, aimed to reduce poverty in the Punjab by focusing on:

Governance reforms

Social sector investments

An economic growth strategy (led by the private sector)

The under-pinning of this entire framework was the understanding that

delivery of services to the people must improve. There can be no compromise

on this over-riding role of the Government. The highlights of our achievements

(and under achievements) in each area are as under: -

GOVERNANCE REFORMS

Our governance reforms revolved around the following principles:

• Performance based governance with focus on outcomes, achievements and results.

• Creating a nexus between resource allocation and effective delivery.

• Passing on the benefits of macro-economic stability to the people through focused investments.

• Believing that good governance is good politics.


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MANAGEMENT OF POLITICS

In pursuit of the above principles we have managed our politics in

accordance with the democratic principles enshrined in the Constitution. The

highlights are:

• Accepting the parliamentary role of the Opposition.

• Abstaining from the politics of revenge.

• Avoiding the use of Ordinances and carrying out the business of legislation through the Provincial Assembly.

In the parliamentary year 25.11.2002 to 3.1.2003 the assembly met for 73 days over 12 sessions against the required number of 70 days. 14 official bills were passed by the assembly during its first year.

In the parliamentary year 25.11.2003 till date the assembly has already met for 34 days against the prescribed 70 days and has passed 19 official bills in this period. (Only one Ordinance relating to the grant of university status to Forman Christian College was necessitated)

No case of relaxation of rules was entertained.

DEVOLUTION AND LOCAL GOVERNMENTS

In my policy statement I had spoken of the great potential of the local

government system to provide services to the people and address development

issues at the grass root level. Some of the highlights in FY 03-04 are:

• Timely and complete transfer of resources to the Local Governments in accordance with the award of the Provincial Finance Commission.

(Rs. in billion) Local Governments FY 02-03 FY-03-04 Percentage increase

District Governments 50.859 55.750 9.62%

Tehsil Municipal Administrations

6.793 7.445 9.60%

Union Administrations 2.702 2.754 1.92%

Total: 60.354 65.949 9.27%


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Additional Support to Devolution

• Transfer of “tied grants” amounting to Rs.5.4 billion under the Punjab Education Sector Reform Programme to the District Governments. (Similar amounts would be transferred in the next financial year.)

• Transfer of extra budgetary grants of Rs.1.25 billion to the Local Governments for accelerated interventions in education, health, road building, village electrification and water supply and sanitation.

• Investment of Rs.3.45 billion under the Tameer-e-Punjab Programme in areas under the jurisdiction of the local governments.

The local government system still requires a lot of nurturing. Capacity

issues in the local governments are a cause of concern and needs focused

attention. That is why despite our policy of granting TMAs financial relief by way

of debt write off and straight transfer of the proceeds of UIP Tax, only 4 amongst

the 122 TMAs took benefit of the Provincial policy. In the coming financial year

we would re-focus our attention on this aspect to improve the financial position of

the TMAs, creating sufficient resources for them to discharge their civic

responsibilities:

Further Measures

• Capacity building support for the local governments shall be provided through the Decentralization Support Programme at a cost of Rs.492 million in the next three years.

• Matching development grants would be available for TMAs through the Rs.5.8 billion Punjab Municipal Development Fund.

• Additional financial support of over Rs.7.4 billion would be made available to 21 select TMAs under the Southern Punjab Basic Urban Services Project.

ACCESS TO JUSTICE

In my policy statement I had stated that the strength of a society lies in the

quality of its system of justice which includes judicial courts, jails and the police. I

had expressed my resolve to provide over Rs.6 billion in the access to justice


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sector in the next three years, in addition to the normal budget. I think that our

estimates were rather conservative and we may be required to invest additional

monies amounting to Rs.12 to 14 billion in the next two years. I base my

estimates on the current year’s additional allocations amounting to over Rs.5

billion. (Rs. in million)

Access to justice

Additional Allocation (Current 03-04)

Additional Allocation (Development 03-04)

Total (03-04)

Judicial Courts 431.22 445.00 876.22

Police 3063.62 767.34 3830.96

Jails 315.66 324.00 639.66

Total: 3810.50 1536.34 5346.84

PHYSICAL HIGHLIGHTS

Judiciary

• Office and residential accommodation of judicial officers is being improved under the Access to Justice Programme.

• A special judicial allowance at the rate of Rs.5,000 per month for District Judges, Additional District Judges, Senior Civil Judges and Rs.4,000 per month for Civil Judges and Judicial Magistrates has been approved.

• The facilities for the litigants are being improved under the Access to Justice Programme.

• Process serving by the courts is being improved.

• An independent prosecution service is being established.

• Consumer protection courts are also being established.

• A legal help line for the general public is being considered for establishment in all districts.

Police

• As a first step to eliminating the “Thana Culture” 175 fully equipped Police Patrolling posts would be established by July 2004 to make the highways safe for the public.


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• These patrolling posts would be manned by offices and staff possessing better qualifications and enjoying salary and allowances equivalent to the Motor Way Police.

• The transport and equipment needs of the police have been augmented and the process would continue in the next three years.

Our resolve to move towards a secure society remains unflinching.

Jails

• Over crowding in jails is being addressed through establishment of new jails/barracks at districts of T.T. Singh, Vehari, Layyah, Bhakkar, Pakpattan and Okara.

Additional barracks for the inmates are being established in 11 other jails.

• Considering that jail inmates are also human beings, special attention has been given to their physical well being.

Diet scale for prisoners was enhanced from Rs.15 per prisoner per day to Rs.20. (Additional impact of Rs.53 million per annum.)

The rate of health cover per prisoner per day has been enhanced from 0.56 to Rs.2.00. (Additional impact of Rs.27.93 million per annum.)

16 ambulances have been provided in 16 jails of the Punjab at a cost of Rs.8.8 million.

Operation theatres/pathology laboratories have been made operational in 8 jails of the Punjab.

Electric Water Coolers and improved toilet facilities have been provided in all the Jails in Punjab.

CIVIL SERVICE REFORMS

In my policy statement I had expressed the commitment of my

government for the creation of a performance oriented public service. You would

be glad to note that the Punjab Management Service has been formally

established and requisitions for recruitment have been placed with the Punjab

Public Service Commission. We would continue our support to the Commission

as we believe in transparent and merit based recruitments. For posts falling


20

outside the purview of the Commission, we have promulgated a merit based

recruitment policy in the Province. The process of recruitment to vacant posts is

continuing on a selective basis, given the resource constraints. This year we

allowed recruitments against 25 thousand vacant posts. In the next financial

year we expect to fill in 30 thousand vacant posts, especially in education and

health sectors. The policy of making recruitments primarily in the contract mode

would continue.

The issue of capacity building cannot be over emphasized. In the

Management and Professional Development Department we are embarked on

intensive pre-service and in-service training programmes for officers and officials

of the Punjab Government, in Corporations and Local Governments. Till date

3,745 participants have attended 120 different training courses at the

Management and Professional Development Department. Further support in

training is being rendered by the Staff College, the NIPA Lahore, the Civil

Services Academy and the Audit & Accounts Institute.

Accountability

For quite some time the issue of accountability of employees of the

Provincial Government was being managed by the National Accountability

Bureau. We deemed it appropriate to bring the issue of accountability into the

Provincial focus. Accordingly the Punjab Anti-Corruption Establishment has

been re-vitalized through the establishment of additional Anti-Corruption regions

at Sargodha, Bahawalpur and Gujranwala to complete coverage for the entire

Punjab. The staff strength of the Anti-Corruption Establishment has been

augmented and the organization is today well equipped to discharge its

responsibilities in an effective manner. A total additional investment of Rs.72.5

million has been made.

The supporting pillars of our governance reforms are financial and fiscal

reforms, reform of the planning processes, improved implementation and better

monitoring and evaluation. I however, propose to take up these issues towards


21

the end of my address as our initiatives in these areas cut across governance

and social and economic policies.

INFORMATION TECHNOLOGY

We live in an age of information! Without using information technology we

cannot cope with the service demands of the people. Information and

Communication Technology infrastructure will be developed in order to realize e-

government in the Punjab province. The vision is to use information technology

for government’s business visions which is to enable and support an efficient,

flexible, responsive and innovative public service delivery with enhanced internal

efficiency and improved decision support system. We believe that good

governance cannot possibly come without building back office operational

efficiencies. The current paper-based manual processes have become

cumbersome due to the sheer size and number of files which are not easily

manageable. In order to bring about a positive change in this direction my

government has already initiated some concrete steps. All the departments are

gradually being provided with an IT enabled work environment. Investment is

being made in provision of computers and peripherals, networking and

databases that form foundation for management information system. Employees

are being prepared through training to adopt IT culture in their offices. Physical

infrastructure is being built with projects like

Punjab Intranet

Punjab Government’s Portal

Central Data Warehouse

Computerization of Land Revenue Records

Motor Transport Management Information System

With these facilities in place an important step would have been taken

towards hassle-free provision of online services to the citizens. It may take little

longer to create IT culture in the government but we are moving towards that

goal. It is my vision that the Punjab Government Portal, gateway to all the


22

departmental websites with facility for online submission of complaints, requests,

suggestions and financial transactions leading to electronic services will bring

transparency in the administrative and financial management and service culture.

SOCIAL SECTOR INVESTMENTS

In my policy statement I had talked about the “poverty of deprivation”.

This meant lack of access to education, health and family planning facilities,

water supply and sanitation and other civic amenities. Experts believe that

unless quantum jumps in investment in these areas are not made, there may be

little impact in reducing the poverty of deprivation. In essence, investments in the

social sector, especially in the public sector, benefit the common man. Since my

government is committed to improve the lot of the common man, we embarked

on a focused and planned investment in the social sectors. Let me share with

you the results of our one year’s effort.

Education

In the public sector education system we targeted the low enrolment, high

drop-out rates, low literacy levels especially amongst females, poor student –

teacher ratios at the level of elementary education, in the first instance. We

noted that of the 10.97 million out-of-school children in the Punjab, 6.09 million

were in the age group 5 to 12 years, meaning thereby that the problem of out-of-

school children was most acute at the elementary level. It was also notable that

gross enrolment in government schools at the elementary level was actually

declining in the Punjab since 1996-97. Studies revealed that inadequacy of

infrastructure in schools, an inability to afford the costs of elementary schooling

by pupils, further aggravated by a gender bias were the key impediments to

improved attendance. You may recall that in the first cabinet meeting of my

government we decided to make education free in all government schools up to

matriculation. This apparently was not enough. Under the Punjab Education

Sector Reform Programme we broke away from the traditional mode of

incremental investments in the education sector. In a three year investment


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programme we planned to invest over Rs.21 billion in elementary education, over

and above the normal budget. In the year under review we made an investment

of Rs.7.2 billion and proposed an additional investment of Rs.8.3 billion in the

next financial year.

PROGRAMME HIGHLIGHTS

Activity-1. Provision of missing infrastructure to 63,000 schools in the Punjab.

• The total number of missing facilities given in the District profiles of all 34 districts was 118,274.

• In the first year of the Programme Rs.5 billion were given to all the districts @ Rs.147 million each.

• The total missing facilities prioritized by the districts for the first year were 36,911 and are under completion.

Activity-2. Distribution of free text books.

• 725,000 students from class Katchi to class–V in the government schools of the Punjab were delivered free text books at a total cost of Rs.494 million.

• In the next financial year we shall extend this programme to classes VI to VIII in the government schools, at a total cost of Rs.600 million.

Activity-3. Stipends to girl students of middle schools in 15 low literacy districts.

• Rs.350 million were allocated for the first year. Expenditure to be incurred till end June would be Rs.334 million.

• In order to check the drop out rate of girls in middle school, Rs.200 per month per girl is being given as stipend.

• Every girl studying in Class 6th 7th & 8th in a government school is qualified provided her class attendance is 80%.

• The target population of such girls in the 15 low literacy districts was 175,000.

Activity-4. Punjab Education Foundation.


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• Punjab Education Foundation has been restructured, with reduced bureaucratic control and allocating Rs.100 million for the first year.

• 70% of the funds would be lent to the rural and poor areas.

Activity-5. Recruitment of new teachers.

• 13,000 new teachers have been recruited on contract on school specific assignments in the current year at an annual recurring cost of Rs.700 million.

Activity-6. Teacher training.

• Against a programme target of training of 150,000 teachers, a training cycle of 90,000 teachers has been completed.

Activity-7. Re-vitalization of School Councils.

• An amount of Rs.500 million was earmarked for disbursement to School Councils in the current financial year.

• 50% membership of the School Councils comprises parents with parent acting as Council Chairman.

• A pilot project in 6 districts (Attock, Chakwal, Gujrat, Faisalabad, Vehari and R.Y. Khan) covering 2400 schools is being undertaken in the current financial year.

Activity-8. Awareness campaign.

• A mass awareness campaign to sensitize parents and the general public was launched on March 4, 2004.

Activity-9. Monitoring and evaluation.

• A programme monitoring and implementation unit has been established.

• Computerized monitoring techniques provide information on real time basis.

• Impact assessment studies, which fell due, are under way.

Preliminary estimates of a single year’s effort reveal a 7% increase in

enrolment at primary level and a 6% increase at the middle level. The net effect

of the increase in enrolment at primary level, due to our efforts, resulted in an


25

increase of 5,24,448. In the next financial year we plan to develop the necessary

linkages between primary and middle level education by dedicating Rs.2 billion

for up-gradation of schools from primary to middle and higher secondary level. In

addition, laboratory facilities in higher secondary schools would be provided

through a phased programme to improve the over all education services.

HIGHER EDUCATION

I am afraid we have not been able to focus on higher education in the

manner as we have done in the field of elementary education. We are still

continuing with incremental budgetary programmes to fund this sector. The

national policy on higher education aims to transform higher education

institutions into world class seats of learning. While we subscribe to this ideal,

the way forward is not incremental but holistic. The random opening of

universities, without a supporting infrastructure and teaching cadre, an absence

of research facilities make out a strong case for a comprehensive strategy to

create a higher education service which fosters quality education, scholarship

and research and provides manpower of the highest quality for staffing positions

in public and private sector. The incremental achievements in this sector were:

• Opening of second shifts in government colleges at inter level to provide greater access.

• 10% increase in the number of seats in the government colleges in the Punjab.

• Establishment of home economics colleges at Multan and Gujranwala.

Surely, these efforts are insufficient to meet our goals. This sector would

therefore require the framing of a comprehensive strategy with clear linkages

with manpower planning.

SPECIAL EDUCATION

In my policy statement I had spoken of our focus on the needs of the

special education sector. I had promised to bring our disadvantaged children into

the main stream of society.


26

• To give focused attention to the welfare of children with disabilities an independent Department of Special education was established on 01.10.2003

• A block allocation of Rs.400 million was provided as a supplementary grant to improve the facilities for education and training of Special Children.

At present only 49 institutions of special education are working in public sector, mostly at district level.

There are about 6 lac special children of school going age in Punjab and only 4200 disabled children are getting education in these institutions.

• 90 additional centers of special education (primary level) are being created to cater for all the disabilities at tehsil level.

• To give incentives to the teaching staff of special education, their salary has been doubled.

• Mobility is one of the major problems of special children. To provide pick-n-drop facility to the special children, provision of new buses in all special education institutions is being made.

At present only one degree college of special education is working in private sector.

In public sector only one inter college for deaf is working at Lahore.

• In order to make a start in this direction a Degree College for Special Education at Lahore is being established.

The existing buildings of special education institutions are not in presentable condition.

The parents prefer to send their children to private institutions.

• In order to improve the condition of buildings of special education institutions, an allocation of Rs.100 million has been made in the current financial year.

A school of special education caters for only one disability.

• In order to extend facilities of education to special children, arrangements for provision of 4 disabilities in the existing schools for special education are being made.


27

The existing Computerized Braille Printing Press is 10 years old.

• Funds for the purchase of a new computerized Braille Printing Press have been provided. This computerized Braille Printing Press will have the advantage of printing Braille and English simultaneously. The books to be published by new press can be read by blind as well as sighted people.

About 3300 hearing impaired students are studying in special education institutions.

• Hearing aids to all hearing impaired students shall be provided on a permanent basis, free of cost by July, 2004.

• The gaps in staff coverage in Special Education Institutions has been met by filling in 226 vacant posts. The recommendations from PPSC in respect of 64 teaching post of BS 16 & 17 are likely to be received shortly.

• Use of play grounds of Sports Department by special children for 2 hours in the forenoon has been arranged.

• An allocation of Rs.23 million was made for training of teachers of Special Education Institutions.

We do not believe in a one-off effort. An additional amount of Rs.400

million has also been provided for this sector in the next year’s development

programme. We plan to revive job quotas for the disabled in the public sector.

To encourage the private sector managed schools of special education a block

grant of Rs.100 million shall be dedicated out of the composite block allocation

for this sector, in the next financial year.

HEALTH AND POPULATION WELFARE

In my policy statement I had spoken of the inadequate coverage provided

by our health care system to our population both in terms of quality and quantity.

While our promised allocations to this sector, remained on track and we

earmarked in excess of Rs.3.5 billon for the health sector and close to Rs.1

billion for the population welfare programme, our successes were only

incremental. I have now directed that a comprehensive health and population


28

welfare management strategy be drafted to develop a workable and sustainable

action plan for this sector.

The above notwithstanding, we have achieved some successes in the

health sector. The highlights are:

• During the current financial year 2003-04, additional funds of Rs.1 billion were provided to the Health Department for.

• Strengthening of Emergency Medical Services

Emergency Medical Service in all Autonomous Hospitals of Punjab

are being strengthened so that the people living in big cities near

these hospitals can get improved, modern and up-dated emergency

services.

• Emergency Ambulance Service Punjab Emergency Ambulance Service is a pilot project in Lahore

City for providing modern, effective and efficient services to the

people of Lahore City. This will be replicated in other big cities of

the Province.

• Multan Institute of Cardiology at Multan

An Institute of Cardiology at Multan on the pattern of Punjab

Institute of Cardiology at Lahore to cover the population of southern

Punjab was launched at a cost of Rs.1 billion. The Project would

functional in 2004-05.

• Missing Facilities in BHU and RHCs

In order to lay the framework of a comprehensive health care plan

needs assessment for providing missing facilities to about 3000

BHUs and RHCs has commenced. It will result in an investment

programme of Rs. 4 billion over the next 3 years starting from

2004-05.


29

This programme would be a major initiative in the Health sector, at

the primary care level and would reduce the poverty of deprivation

of health services in the rural areas.

• Creation of Burn Unit at Jinnah Hospital, Lahore.

Agreement was reached during the current year with the Federal

Bait-ul-mal Department for creating a Modern Burn Unit at Jinnah

Hospital. Lahore. The Project will be started during 2004-05 at a

cost of Rs.150 Million. This will provide modern burn care services

to burn victim’s most of whom are poor women.

• Lady Health Workers

Sixteen thousand (16000) village based Lady Health Workers will

be added to the existing 35000 Lady Health Workers in the

Province to provide coverage to uncovered rural areas in Public

Health Care as well as family planning.

• Public - Private Partnership

Public – Private partnership was successfully implemented in

Rahim Yar Khan District where management of BHUs was

entrusted to the Punjab Rural Support Programme. The initial

results have shown more than a 100% increase in utilization of

these facilities. It will be evaluated and replicated in at least six

other districts during 2004-05 to enable larger number of poor

people to benefit from this management innovation.

• College of Nursing. Graduate classes in the first College of Nursing in the Punjab

Province have been started at Allama Iqbal Medical College.

Another College of Nursing shall also be opened in Nishtar

Medical College Multan during 2004-05. This will provide a

boost to Nursing education and profession in the Province.


30

• Free Medicines in Emergency Efforts were made to provide completely free medicines and

treatment in emergency at all levels of health care in the Province.

This effort and strategy will continue for the benefit of the poor.

• Autonomy to Teaching Hospitals.

The process of granting administrative autonomy to Teaching

Hospitals shall be strengthened by allowing them greater say and

authority in recruitments and purchases.

We would also embark upon a programme of upgrading Tehsil

Headquarters Hospitals, in a phased manner. Allocation for this purpose has

already been made in the next year’s development programme.

Public Health (Water Supply and Sanitation)

It is now universally accepted that the best interventions in preventive

health are in the field of water supply and sanitation. Since under the devolution

of power plan this function was assigned to the Tehsil Municipal Administrations,

the Provincial Government could not pay enough attention to this sector. We

have now created a provincial resource base for extending capacity support to all

TMAs in the Punjab on a free of cost basis. This resource base would also

execute schemes as a part of our accelerated social development programme

and would in due course be merged with the capacity of the TMAs. In the next

financial year we propose to allocate about Rs.3 billion to this sector to provide

enhanced water supply and sanitation facilities to 10,25,000 people. This

programme would continue in the subsequent years.

Direct Interventions for Poverty Alleviation

While we are addressing issues relating to the poverty of deprivation of

services let me share with you some data on the poorest of the poor. These are

the people living below poverty line i.e. these of our people do not have enough

food to sustain and need their daily calorie needs.


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ESTIMATED POPULATION BELOW POVERTY LINE (1993-1999)

(Figures in Million) PROVINCE 1993 1999 %age change PUNJAB 17.2 25.9 51% SINDH 6.6 8.6 30% NWFP 5.6 8.0 43% BALOCHISTAN 1.7 1.6 - 6% TOTAL: 31.1 44.1 42%

DISTRIBUTION OF POPULATION BELOW POVERTY LINE (1993-1999)

PROVINCE 1993 1999 PUNJAB 55.3% 58.7% SINDH 21.2% 19.5% NWFP 18.0% 18.2% BALOCHISTAN 5.5% 3.6% TOTAL: 100% 100%

The above data reveals that:

• Poverty is growing in Pakistan and the number of people below the poverty line increased by 42% between 1993 and 1999

• Growth of poverty in Punjab during this period was an alarming 51%

• The growth of poverty in Punjab was the highest in comparison with other provinces

• Of the number of people below the poverty line 58.7% live in the Punjab

While the Economic Survey, 2004, released by the Government of

Pakistan highlights a decline in poverty, we need to make concerted efforts to

reduce poverty, even further. In my policy statement I had expressed the resolve

to address the needs of the poorest of poor in a more direct manner. I had

stated that our efforts in this field would revolve around reducing income poverty

through the provision of micro-credit, targeted interventions through monthly

stipends and undertaking schemes of permanent rehabilitation of individuals and

families from Zakat & Bait-ul-Maal funds. I had expressed the resolved to


32

disburse in excess of Rs.10 billion in the next three years under these heads.

Let me share with you the results of our actions in the financial year 2003-04.

Zakat

• Permanent Rehabilitation Package. Aims at one time grant to the

Zakat Mustahq families to rehabilitate them making them economically

self sufficient once for all and striking out their names from the list of

Mustahqeen-e-Zakat.

As on 31-3-2004

Heads Amount allocated

Amount Disbursed

No. of Beneficiaries

Permanent Rehabilitation

Package

Rs. 1414.211 million

Rs. 1339.987 million (upto 31-

3-2004)

102800

Monthly Stipends . As on 31-3-2004


Amount Disbursed

(Rs. In million)


Guzara allowance 611.396 606.173 363919 Educational Stipends

183.419 98.709 84022

Stipends to students to Deeni Madaris

81.520 35.500 18790

Other Heads. As on 31-3-2004


Amount Disbursed

(Rs. In million)


Health care 81.139 35.504 65614 Social Welfare/ Rehabilitation

40.759 29.405 5881

Marriage Grant 40.759 29.651 2966


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• Vocational Training Institutes. Government of Punjab has introduced a

new concept for imparting training to the young boys & girls of Zakat

Mustahiq families enabling them to secure employment as skilled

workers in the private and public sectors and earn their livelihood in an

honourable way. So far 58 Vocational Training Institutes have been

established in the province; establishment of 29 Vocational Training

Institutes is in the pipeline with the target of establishing 120 such

institutes upto 30-6-2005. The achievement during the current

financial year is given as under:-

As on 31-3-2004


Amount Disbursed


VTI (MORA Technical Scholarships)

Rs.263.400 million

Rs.263.400 million

8690 (+ 3310) 12000

The cumulative effect of our efforts in the Zakat sector in financial year

03-04 (up to 31st March, 2004) were a disbursement of Rs.2.4 billion affecting

6,56,000 beneficiaries.

Bait-ul-Maal

The achievements in the Bait-ul-Maal sector in the outgoing financial year

were:

• Deserving students (4278) were given scholarships to the tune

of Rs.19.012 million.

• Patient Welfare Societies were provided Rs.3.36 million for purchase of equipment such as Dialysis, Cardiac monitor and Blood Cell Separator machines for the treatment of 772 patients.

• 440 NGOs were provided grant in aid to the tune of Rs. 27,991,974/-.

• Under a scheme for financial assistance of poor families for marriage of their daughters 2210 poor girls were provided Rs.9,347,176/-

• Under the provision of interest-free-loan for self-employment to widows 255 persons were provided Rs.3,381,523.


34

Micro-credit through Punjab Rural Support Programme

• Micro-credit facilities were provided to 33,000 individuals up to April, 2004 involving a total outlay of Rs.347 million.

Access to Physical Assets

The highlights of the two schemes viz Land to Landless and Shelter to the

Shelterless are as under:

Land to Landless.

• Land worth Rs.316,000,000/- approximately was earmarked for allotment to more than 7000 landless tenants in the first phase.

• 5,000 landless tenants have already been allotted 12.5 acre land each in Muzaffargarh, Bahawalpur and R.Y. Khan. Highlights of the scheme are:

Provision of 12.5 acres of agricultural land per family. Landless tenants / small land owners will be eligible. A nominal price Rs.5 per PIU, payable in easy installments. Possession / conveyance deed delivered to allotees on payment of

first installment. Subsistence holding (12.5 acres) capable of sustaining a family.

Shelter to the Shelterless

• 1,20,000 five marla plots have been earmarked for distribution in a phased programme.

• Physical distribution would commence from July 2004.

Highlights of the scheme are:

Provision of a 5 marlas plot per family. Non-proprietors in rural areas are eligible. These plots will be allotted free of cost. Grant of proprietary rights on completion of house.

Grant of proprietary rights and development of Katchi abadies in urban

areas is also receiving the special attention of the government.


35

Social Welfare

Our primary intervention in the social welfare sector in financial year

2003-04 revolved around protection to the destitute and neglected children.

• The Punjab Destitute and Neglected Children’s Act 2004 for the rescue, protective custody, control, care, treatment and rehabilitation of destitute and neglected children in the Province was promulgated.

• A bureau of child protection has been established.

• The bureau would be fully functional from July 2004.

Other initiatives in the social welfare sector included:

• Establishment of a Dar-ul-Amman at Lahore at a cost of Rs.9 million during the current financial year.

• The establishment of four centres for women in distress (PANNAH) at Lahore, Rawalpindi, Multan and Bahawalpur at an estimated cost of Rs.10 million.

• 133 Community Development Projects were completed with the help of Community based Organizations and around 5 million men, women and children were served through these programmes.

• Under the programme, Employment & Rehabilitation of Orphans, Widows & Destitute, 15240 have been benefited.

• Against an annual target of 300, 346 new NGOs were registered and 110 inactive / defunct NGOs were reactivated.

• National Council of Social Welfare (NCSW) and Punjab Social Services Board (PSSB) released grants of Rs.4.800 million to 376 NGOs.

• During current financial year 234,771 patients were provided medicines, blood donations and artificial limbs in Government Hospitals out of Zakat funds through Medical & Social Services Project.

• Under the programme for rehabilitation of handicapped, disabled and mentally retarded persons, 6549 disabled persons were served and provided employment, financial assistance, artificial limbs etc.

• Punjab Welfare Trust for the Disabled (PWTD) provided assistance to the tune of Rs.18,920,000/- to 53 institutions / NGOs.


36

Minorities

In accordance with the Principles of Policy enshrined in the Constitution of

Pakistan the welfare of the minorities is a charge on the State. We plan to

support the welfare of the minorities through an annual allocation of Rs.100

million which would progressively grow to over Rs.300 million per annum. I have

also passed instructions to place schemes relating to the welfare of the minorities

in the Provincial ADP for the next financial year.

Women Development and Gender Reforms

While a separate Ministry for women development was created in this

financial year, I realized that gender reforms cut across all sectors. My

government can take credit for taking the lead in approving the gender reform

action plan (GRAP). This programme would entail of cost of Rs.177 million in the

next financial year for undertaking reforms in the following each area:

• Political participation of women

• Institutional reforms

• Women public sector employment reforms

• Gender sensitive budgeting and planning

• Capacity development

Other major achievements were:

• Recruitment of women in police and prisons department

• Construction of separate barracks for women in different jails

• Deputing lady doctors to visit female prisoners

• Establishment of socio-economic and rehabilitation centers for women prisoners in 10 jails in Punjab at a cost of Rs.7.11 million

• Training of women NGOs and Advocacy programme at a total cost of Rs.5 million

• Establishment of shelters (Homes) for needy women at large district headquarters at a total cost of Rs.20 million


37

• A law to provide relief to victim of domestic violence and to ensure to protection of women is being promulgated titled “The Punjab Prevention of Domestic Violence Act”

• 22,000 women councilors have retained through three days training workshop held all over the Punjab.

• A total of 17000 women councilors were trained through 500 training sessions held under Women’s Political Participation Project (W3P) with collaboration and financial support from Ministry of Women Development, Social Welfare & Special Education, Government of Pakistan.

• Around 800 District Level Women Councilors have been trained in computer literacy.

• Under “Voicing of the Poor”, empowering rural women in 10 Tehsils of Punjab, 25000 women were enrolled (between 15 to 25 years of age) for 8 months training program in literacy, skill development. The programme successfully ended in June, 2004.

ECONOMIC GROWTH STRATEGY

In my policy statement I had touched in brief on our economic growth

strategy. This aimed at creating a nexus between agriculture, industry and

business. I also spoke of the need to improve productivity, to create employment

opportunity and improve incomes. I had also spoken of the lead-bearing role of

the private sector in economic development and complementary efforts being

made by the public sector as well as creating public private partnerships. By the

grace of God we have been able to evolve a more comprehensive economic

vision. However, let me share with you the details of our efforts in the outgoing

financial year.

Agriculture

Let me remind you of what I had stated last year.

“Agriculture being the main stay of Punjab’s economy, the promotion of agriculture is the major priority of my government. Our focus is on increasing farmer profitability, reducing the cost of production to the extent possible, providing access to affordable credit, improving the delivery of extension services, rapid development of agriculture research and creation of enabling marketing systems. We have already set the ball in motion. My government took the lead in substantially reducing mark-up


38

on agricultural loans through the Bank of Punjab, an initiative followed by the federal government”

We also raised the ceiling of exemption from Agriculture Income

Tax from 5 acres to 12.5 acres, believing fully that subsistence farmers

needed special care. A flat rate for Abiana was imposed at the rate of

Rs.50 per acre for Rabbi crops and Rs. 85 per acre for Kharif crops. In

the process the farmer was released from the clutches of the Irrigation

Patwari.

In line with my policy statement we allocated over Rs.2.5 billion to

the different wings of the Agriculture Department in the outgoing financial

year.

A summary of activities of different wings during 2003-04 is as follows:

• EXTENSION

An aggressive program for training of farmers was launched for transfer of advanced technology for wheat production to farmers. A total of 618 teams were mobilized which trained 8,69,897 farmers in 21,911 villages. A total of 5,34,445 brochures were distributed among the farmers.

For effective transfer of cotton production technology to farmers, 333 teams were mobilized which trained 5,94,739 farmers in 9,714 villages. During these training sessions, 255,084 brochures were distributed.

For educating the farmers in sugarcane production technology, 410 teams were mobilized which trained 3,83,500 farmers in 10,560 villages, distributing a total of 78,493 brochures in the process.

For effective transfer of rice production technology to the farmers, 243 teams were constituted which trained 2,75,792 farmers in 8,820 villages, distributing 3,99,641 brochures in the process.

A telephone-based help-line is also being operated to provide quick and problem–specific response to the farmers’ queries. During the year 2003-04, 6840 enquiries were received (upto April, 2004) from the farmers and responded to after taking necessary action on the same day.


39

• RESEARCH

During 2003-2004 the Provincial Seed Council approved cotton variety BH-160 for general cultivation in the Punjab. The variety has high yield potential, better fibre qualities, early maturity, heat tolerance and virus resistance.

Advisory service to the farmers was rendered by analyzing 89752 soil / water / fertilizer / plant samples for efficient use of inputs.

• MARKETING

The Government has addressed the weak area of agricultural marketing by appointing a full-fledged Minister and Special Secretary Agriculture Marketing to exclusively deal with the affairs of agricultural marketing. An autonomous body is also being set up for introducing reforms in the marketing system to exploit the trade potential of our products in the international market.

I must however admit that agricultural research and agricultural marketing

are two weak areas of our economic management. As would be obvious from

my economic vision we are already seized of this problem and are making

concerted efforts in these sectors. Some of the initiatives in the agricultural

marketing sector are as under:

• Process of restructuring of the marketing system has been initiated.

• A survey of markets which need shifting is under process.

• Technical assistance from ADB worth 0.78 million dollars for the improvement of marketing of horticulture and dairy products is in pipeline.

• 8 major markets have been interconnected through MIS to improve market information service.

• Information automation scheme has been launched at a cost of Rs. 20 million.

• Crop reporting service is going to be strengthened at a cost of Rs.27 million.


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• Post Harvest Research Centre is being strengthened at a cost of Rs.12 million.

• Pesticides residual testing lab is going to be established at Sargodha at a cost of Rs.103 million.

• Early estimation of potato crop for timely export has been arranged by the agriculture department.

• Horticulture Development and Export Boards has been established.

• Establishment of export processing zones at Sargodha and Multan/ Rahim Yar Khan is under active consideration.

• WTO cell has been established to watch its implications.

It is a part of my vision to create and regulate a model agricultural commodities

marketing system that facilitates fair pricing and assured flow of agricultural

commodities from farms to end consumers / retailers.

We also plan to strengthen agricultural research by hiring foreign

researchers to take over specific projects in the following areas: -

Cotton Wheat Livestock Vegetables

• CREDIT AVAILABILITY

Availability of credit from Bank of Punjab during the period from July, 2003 to February, 2004 increased by 33% as compared to the corresponding period of the previous year.

The credit was made available at an interest rate of 9% which is the lowest in the country for agriculture credit.

From July 2004 the interest rate of credit by Bank of Punjab for agricultural production loans would be reduced to 8% from the existing 9%.

The interest rate for tractor loans given by the Bank of Punjab would be reduced to 10% from the existing 11% from July 2004.

The government provided transport subsidy on export of potato to stabilize prices in order to save the growers from financial


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loss. An amount of Rs.73.00 million was provided by the Federal Government whereas the balance amount of Rs.10.000 million was provided by the Government of Punjab.

As a result of the above initiatives and the Industry of our farmers, the

production targets for cotton of 7.702 million bales were achieved, a record

production of 2.871 million tonnes in rice crop was witnessed, Sugarcane

production was an all time high at 34.023 million tonnes. Wheat production

however was hit by abnormally high temperature at the time of grain filling and

rains at the time of harvesting. None the less the farmer received a price of over

Rs. 350 per 40 kg for his crop.

Irrigation

I had observed last year that the maintenance of our irrigation system and

the adoption of water conservation methods were critical to sustaining our

agriculture. The major achievements in the irrigation sector are given below:

• Imposition of Aabiana in the flat rate mode The imposition of Abiana in the flat rate mode has been well received

by the farmer community. The age old control of the Nehri Patwari has been eliminated. Collection efficiency of Aabiana is being witnessed. 50% rebate in Aabiana was granted to farmers at tail end to give relief against drought conditions.

• Revision of Yardstick for maintenance of Irrigation System The yardstick for M&R of the irrigation system which was approved in

1992 has recently been rationalized. As a result of this, additional funds under M&R would be available for sustained maintenance and upkeep of the irrigation system as below:

Component Additional O&M Allocation (Million Rs)

Canal System 238 Embankments and Flood Works 145 Drainage 49 Lift Schemes 62 Buildings 84

Total: 578


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These funds will be utilized through well formulated Work Plans which will

be implemented under strict supervision and monitoring. This would

progressively improve upkeep and maintenance of irrigation system which

is vital for our agrarian economy.

• Mega Projects under Federal PSDP Irrigation System Rehabilitation Project Phase -1

The project has been approved at a cost of Rs 19.5 billion. During the year 2003-04, funds amounting to Rs 350.0 million have been released and the work on rehabilitation of Eastern Sadiqia has been initiated while work on other sub-projects viz: LJC System, Southern Branch and Main Branch Lower is being taken up. The sub-projects of rehabilitation will be progressively taken up on allocation and receipt of funds from the Federal Government.

Punjab Barrages Rehabilitation and Modernization Project Phase.I There are 14 barrages on rivers in Punjab which irrigate 21.50 million acres of land through 24 canal system having 23184 miles length of channels. These barrages are old and the river morphology has changed due to transfer of water of three eastern rivers to India and construction of storage reservoirs. Under phase-I of the project Rs.745.0 Million have been allocated. The project has been launched and initially emergent repair works of barrages have been taken up during the current year. Feasibility study of six barrages under this phase is also in progress. Taunsa Barrage which is the most vulnerable barrage has been put on fast-track basis for its rehabilitation / modernization under World Bank financing during FY 2004-05.

Lining of Irrigation Channels (Distys / Minors) in Punjab The project envisages lining of 8873 canal miles, which has been approved at a cost of Rs 31.0 Billion. The project has recently been launched and will be implemented under a phased program. Lining of Canals for efficient conveyance and for reducing losses has also been undertaken under the National Drainage Program and Provincial ADP. During the current financial year 2003-04, lining of 20 miles under NDP, 80 miles under ADP and 18 miles under the mega project of lining is being carried out. This would facilitate common farmers for irrigating land efficiently and over coming tail shortages.

Remodelling of LCC System under National Drainage Program The project was approved at a cost of Rs.2.4 billion. Out of total 14 packages under part-A of the Project, work on 11 packages has been awarded and the work has been initiated since 15th March 2004. With the implementation of the project, the capacity of canal would be raised from


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12,243 cusec to 15,500 cusec which would benefit 3.04 million acres area currently suffering from rotational water supply due to constraint in carrying capacity of the system. This project is being funded under the National Drainage Program.

Interventions under National Drainage Program (NDP) Under this program, out of total 31 sub projects of rehabilitation of drains (involving 6225 structures) costing Rs.874 million, 27 sub projects have been approved, 3 projects have been completed, 17 sub projects (RS 338 million) are under implementation and 7 sub projects (RS 213 million) are under tendering / award. Similarly 13 sub-projects of lining are under implementation and 47 sub-projects are under tendering/award. Under On-Farm Water Management component of NDP, out of total 500 watercourses to be improved, 100 watercourses have been completed while 188 watercourses are under implementation.

Institutional Reforms Comprehensive planning for effective and efficient farmer’s participation in the management of irrigation system in the form of Khal and Nehri Panchayats has been initiated. The work of social mobilization and establishment of Khal and Nehri Panchayats is proceeding on a fast-track basis and over 3400 Khal Panchayats and 128 Nehri Panchayats have been organized in Pilot Area Water Board in the Lower Chenab Canal (LCC) East Command, Faisalabad. The work of social mobilization and formation of the Nehri Panchayats is proceeding progressively. Emphasis is being given to the capacity building of these entities. These Khal and Nehri Panchayats are being operationalized for participatory management of canal distributary system. Transfer of management to selective Nehri Panchayats is also being considered on a pilot basis. In addition, the Pilot Area Water Board of LCC (East) is also under process of operationalization.

• Major Achievements under Provincial ADP Remodeling of M.R.Link project has been implemented at a cost

of Rs 400 million. As a result of this, the capacity of M.R.Link has been restored from 14,000 cusec to 22,000 cusec. This has enabled to supply additional canal water of 7,000 cusec, benefiting 1.5 million acres area in Districts Bahawlnagar, Pakpattan, Okara and Sahiwal for improved irrigation.

Two projects of “Remodeling B.S.Link” costing Rs 400 million are under implementation. On completion of the projects, about 3000 Cs additional canal supply shall be provided in the drought stricken areas of Bahawalnagar / Bahawalpur Districts.


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Abbasia Link Canal with an initial discharge of 3000 Cs has been opertionalized. This will improve irrigation supplies in brackish groundwater areas of Districts Rahim Yar Khan / Bahawalpur.

A project “Lift Canal to Feed Areas on Left of BRBD Canal” costing Rs 315 million is under execution. This will irrigate about 68000 acres of land through gravity flow which was being irrigated through 110 tubewells. This will eliminate a huge expenditure of running the tubewells.

The project “Knocking Down Old Weir and Training Jammu Tawi to Control its Confluence with Chenab River U/S of Marala Barrage Sialkot” has been completed at a cost of Rs.53 million. By the implementation of the project effective control over the river Chenab U/S of Marala Barrage has become possible and the gigantic canals of UCC and M.R.Link have been saved against their scour / siltation.

Basal Dam was constructed in District Attock at a cost of Rs.30 million. This will irrigate about 400 acres of virgin land besides meeting drinking water needs.

Mial Dam in District Chakwal (Rs.66 million) and Lehri Dam (Rs 127 million) in District Jhelum have been approved and launched for implementation during the year 2003-04. These Dams will irrigate about 3155 acres of virgin land besides meeting with the drinking water needs of the people living in the area. These dams shall be completed by June 2005.

A project “Fan Management of Mithawan Hill Torrent in DG Khan District” costing Rs.300 million was launched with the assistance of Government of Japan. GO Japan had provided machinery costing Rs.162 million whereas civil works costing Rs 202 million have been started during the year 2002-03. With the implementation of this project, 35,000 acres Barani area of District DG Khan will be benefited.

Livestock

The achievements in the livestock sector in FY 03-04 were:

• Access to credit lines for development of livestock and dairy industry

Bank of Punjab, Zarai Taraqiati Bank of Pakistan and Khushali Bank have started loaning facilities to the livestock farmers in the Province of Punjab.


45

The farming community is being benefited of the loaning facility at 6-8% Mark Up. The loans are advanced on personal guarantee, mortgage of the Agriculture land and the Urban properties for purchase of milk animals, milk transportation facilities.

Bank of Punjab has also implemented a scheme to finance the Village Veterinary Workers trained by the L&DD Department for procurement of Artificial Insemination kits and Bicycle on personal guarantees. The maximum limit of loan is Rs.45,000/-. L&DD Department has trained 1000 Village Veterinary Workers up till now.

• Replication of Idara-e-Kissan model for development of livestock and dairy industry.

Idara-e-Kissan model has been replicated with an amount of Rs.37.00 million in District Muzaffargarh (Rs.10.00 million funds from Govt. of the Punjab and Rs.17.00 million funds from Idara-e-Kissan)

Physical activities undertaken:

N0 of villages registered 27 Registered members 580 Cooling tanks(1800 lit) 6 Vaccination of animals 4,500

The Idara-e-Kisan Project would be extended to 5 additional districts in the Punjab in the next financial year. The Project would be located close to existing marketing centers.

• Breed improvement

Production of 1.42 million doses of semen 1.11 million buffalos and cattle inseminated 5 lac livestock farmers benefited 540 breeding bulls issued to livestock breeders

• Animal Health

Veterinary treatment provided to 5.46 million animals 31.44 million animals vaccinated against contingent diseases. 25 lac livestock holders benefited.


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Enabling environment for entrepreneurs (Industrial Development)

In my Economic vision I have talked at length regarding our emphasis on

industrial development and releasing the energies of the private sector for

playing a leading role. Our initiatives in this sector are as under:

No Government sanction is required for setting up any Industry, in terms of field of activity, location and size, except for the following:

- Arms & Ammunitions - High Explosives - Radioactive Substances - Security Printing, Currency & Mint - Alcoholic beverages & liquors

Boiler and Electrical inspections have been outsourced.

A WTO Cell has been established in the Industries, Commerce & Investment Department.

A private sector led Punjab Industrial Estates Development & Management Company (PIEDMC) has been established to set up modern Industrial Estates and to maintain the existing large Industrial Estates. The Government has allocated Rs.1.35 billion. PIEDMC has started work on the establishment of a large Industrial Estate at Sunder near Lahore and also started renovation work at the Industrial Estates at Kot Lakhpat and Multan.

Private Sector led Industrial Management Associations with majority members from the private sector, have been constituted in all the Industrial Estates in the Province to operate and maintain them with minimum interference by Government agencies.

The concept of Industrial Estate Development would be backed up by a composite development plan through establishment of workers schools, labour colonies, hospitals and technical training institutions around an Industrial Estate.

The Punjab Small Industries Corporation (PSIC) has sanctioned loans for 1332 Small Industrial Enterprises, amounting to Rs.1303.24 million.

The PSIC has renovated and provided missing facilities in 5 of its existing Small Industrial Estates.

TEVTA has re-organized and upgraded its technical & vocational institutes and enrolled 93,000 additional young persons for skills training. The annual training capacity has also been increased from


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72,000 to 89,000. Eight new Technologies and sixty new trades / courses have been introduced along with latest training equipment at TEVTA Institutes.

To facilitate Investment, foreign investors are permitted to hold 100% equity of projects in the manufacturing sector. 25% of available plots in all Industrial Estates have also been reserved for Foreign Investors including overseas Pakistanis.

My government announced the Punjab Industrial policy 2003 which is

based on the doctrine of non-intrusion and least interference and on minimizing

the regulatory role of the Labour & Human Resources Department. This policy

has brought about far reaching changes by shifting the focus away from coercion

and intimidation to self assessment and self accountability.

• A system of Self Declarations in social security has been introduced.

• In the first nine months period (July 2003 to March 2004), Social Security

receipts were Rs.837,199,904/-, which was more than the budgetary

target.

• Education Cess, which was a cause of nuisance to industry, was

abolished and stipends and expenditures charged to the education cess

were taken over by the government.

• The industrial policy also provides for the construction of 20 new 100

bedded hospitals in phases for the labour community.

• The existing capacity of the hospital beds is being increased to 3500 from

1400 in a phased manner.

• Punjab Social Security Health Management Company is in the final stages

of its creation, which shall provide medical coverage in a very effective

manner. This company would be in operation in July 2004.


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Housing and Construction Industry

We are targeting Housing and Construction Industry as an engine of our economic recovery. We realize the potential of this sector and made a modest beginning last year by reducing the stamp duty and registration fee for legal mortgages on housing loans to 0.5% of the transaction. In the coming financial year, the Housing and Construction Industry would be provided adequate tax and non-tax incentives to promote this sector. In addition, land acquisition laws, rent control laws, building by laws and the law relating to property tax would be reviewed to remove impediments in the path of the housing and construction industry. The by laws relating to high-rise buildings would be specially re-visited to improve land use in the commercial centres of the highly urbanised mega cities.

To complement the activities of the private sector, the Government of the

Punjab has launched the Punjab Government Servants Housing Foundation

which shall provide a house to each retiring government servant in the Punjab

from BS-1 to BS-22. Initially 5,000 to 6,000 houses would be constructed

annually. However, this number would ultimately increase to almost 30,000

houses per annum. A beginning was made to launch this scheme by allocating

Rs.373 million in the outgoing financial year to the Foundation. In future years,

the annual allocation is likely to range between Rs.300 to Rs.400 million. The

net effect of this programme would be to demonstrate government’s commitment

to the housing sector as well as undertaking a welfare measure for its

employees.

Developing Communications Network

I had emphasised the importance of communications infrastructure in

developing our productive sectors. I had observed that access to

communications had a positive effect on the economy of a local area by

increasing mobility, reducing transportation time and cost, enhancing access to

goods and services and stimulating commercial and other income generating

activities through better access to markets. I had committed an allocation of over

Rs.10 billion in the road building sector in the medium term, as well as promoting


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projects in BOT mode. Let me share with you the highlights of our achievements

in the outgoing financial year: -

• An initial allocation of Rs.1,018 million in the roads and bridges sector was made in the current financial year which catered for widening / improvement of 330 kms of roads in the province.

• An additional allocation of Rs.4,052 million was made in January 2004 enabling us to undertake widening / improvement of 850 kms of road length.

• Development, rehabilitation and upgrading of urban road network was initiated in the mega cities of the Punjab and would continue to remain in focus in the next three years.

• The Lahore Faisalabad road project has been let out to the private sector in the BOT mode and construction work on the project has already commenced.

It is a part of my vision that every village in the province is provided

access to a metalled road. For this purpose I have initiated the Accelerated

Programme for Communication Infrastructure Development in the Punjab. We

hope to invest Rs.7 billion in this programme in the next three years. A beginning

has already been made through a proposed investment of Rs.2 billion in

FY 04-05

Reform of Planning and Implementation Processes

Our achievements of financial year 2003-04 may not have been possible

without initiating the process of reform in our planning and implementation

processes. The Planning and Development Department was taken out of its

project focused mode and steps were taken to make it into a dynamic organ of

economic and social planning. The public sector development investment and

sectoral policies now follow a clearly defined agenda. Let me give you a preview

of the change management which has taken place in the Planning and

Development Department. The objectives and priorities set forth by the Planning


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and Development Department are now completely in line with the economic and

social vision of my government.

PUBLIC SECTOR DEVELOPMENT INVESTMENT

The Public Sector Development investment will be tailored to achieve the

following objectives:

• Accelerating economic growth.

• Reduction in poverty.

• Balanced regional, gender and minority development.

• Consolidation of existing physical and social infrastructure.

• Improvements in public service delivery in education, health and water and sanitation sectors and enhanced coverages.

• New infrastructural development through public-private partnership.

SECTORAL POLICIES

Social Sectors

• Commitment to enhanced coverage in the social sectors, with a view to achieve all targets fixed for the Millennium Development Goals, with the recognition that investment made by the Local Governments alone will not suffice to meet the goals.

• Launching of the Accelerated Programme for Social Development for this purpose.

• All administrative departments concerned would be responsible for preparing medium term plans in the social sectors which will identify targets, gaps, priorities and service standards. The departments would also be responsible for developing policy guidelines to be followed by Local Governments and to develop monitoring/ regulatory mechanism to ensure adherence to policy, quality, equity and sustainability in the delivery of service.

Urban Services

• Development of institutional arrangements to address policy and strategic planning in big and intermediate cities. An over-arching Provincial Urban Policy will be put in place along with the Institutional Capacity to oversee its implementation.


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• Interventions will be designed to unleash the full economic potential of the urban areas. The key element of this strategy would be: -

Developing and implementing a collaborative work plan for a more focussed approach to address the growth potential of each region based on the full spectrum of potential public and private sector capabilities.

Cultivating and pursuing successful public and private sector partnerships to help realise this latent potential, as government financing alone will be insufficient to meet the investment requirements.

Economic Infrastructure

• The water sector would see the launching of a major programme for the modernization and rehabilitation of barrages and canals. Institutional reform process in the sector would also be addressed along with a programme in improve water-efficiencies in the province.

• The vision of providing every village in the province access to a metalled road will move a step closer with the launching of the Accelerated Programme for Infrastructure Development.

Implementation and Monitoring

The planning effort needs to be backed up by an effective implementation

and monitoring system. We have created a project monitoring unit in the

Planning and Development Department which shall monitor the progress of

development projects by employing the concept of “earned value”. Under this

reformed monitoring system the physical progress and the financial progress

achieved during the execution of development schemes shall be monitored

simultaneously. This would enable top managers to monitor projects closely and

rectify deficiencies during project execution. This would ensure timely financial

flows to projects, constantly review the project conception and design and in the

process generate internal pressures on Planning, Finance and the line

departments.


Fiscal and Financial Management

Our efforts to generate economic growth, to make accelerated social

sector investment and to combat the menace of poverty cannot be achieved

without a reformed fiscal and financial management system. Creation of fiscal

space is absolutely essential for sustainable pro-poor investments and

accelerated economic activity. As you know the Province of the Punjab was

caught up in a vicious cycle of financing and service delivery. The fiscal squeeze

due to low revenues, high debt service and establishment costs, pensions and

subsidies meant low level of spending on public services. This translated into an

inadequate provision of services to the public. That led to a low potential tax

base, creating a worsening financial squeeze. This did not augur well for my

programme of reducing social deficits resulting in inadequate investments in

health, education, water supply, sanitation and access to justice. It would have

also affected my programme of reducing the infrastructure deficits resulting from

inadequate outlays for maintenance of the irrigation system, buildings and roads

network.

VICIOUS CYCLE OF PROVINCIAL FINANCES AND SERVICE DELIVERY

FISCAL SQUEEZE DUE TO LOW REVENUES,

HIGH DEBT SERVICE AND ESTABLISHMENT COSTS, PENSIONS AND SUBSIDIES

LOW POTENTIAL TAX BASE

INADEQUATE PROVISION OF SERVICES TO THE PUBLIC

LOW LEVEL OF SPENDING ON

PUBLIC SERVICES

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53

We adopted a three pronged strategy to break the vicious cycle of

provincial finances and services delivery in the Punjab. Firstly, problems in

public expenditure management had to be addressed. Secondly, provincial

revenues had to be strengthened and thirdly, improved planning, documentation

and accountability of public expenditure had to be ensured.

The process of rationalization of provincial expenditures began by

adopting a debt management strategy to restructure and reduce provincial debt.

High interest commodity loans were swapped with low interest loans. In the

current financial year we retired over Rs.12 billion of our high cost loans thus

creating a fiscal space of over Rs.1 billion for the next financial year. This policy

would continue.

We also undertook the phasing out of subsidies which did not explicitly

target the poor. As a result we provided a targeted subsidy of over Rs. 500

billion to the poor and in the process created a fiscal space of almost Rs. 1.2

billion. Simultaneously we adopted a policy of intra-budgetary shifts, thus moving

expenditures towards the social sectors at the cost of non-productive sectors.

We also increased the outlays for O&M expenditures in buildings, roads and

irrigation thus redeeming my observation that current expenditures needed to

complement the development activity. In addition we have targeted receipts from

privatization as a revenue source to finance our social and economic sectors.

Much more needs to be done. We still have to tackle the high cost of our

pension and GP Fund liabilities. These contingent liabilities require to be phased

out of the budget by the creation of separate self financing funds. This is our

target for the future.

Our fiscal reform measures envisaged a broadening of the tax base and

restructuring of provincial taxes and duties. During the financial year we

completed the restructuring and simplification of property tax. The base of

professional tax was broadened. More importantly the desire to re-impose low

yielding taxes was resisted. Above all, we would be rationalizing stamp duties,

the details of which would be presented in the budget 2004-05. On the negative


54

side we are still struggling for improving the receipts from the agriculture income

tax.

Overall our revenue collection from provincial taxes is expected to improve

from the budgeted Rs.14 billion to Rs.18 billion, a record increase of 31%. This

entailed a lot of effort to create fiscal efficiency, and plug revenue leakages. The

non-tax receipts are likely to improve from Rs.10.49 billion to almost Rs.14

billion, again a record increase of 45% over the budget estimates. I must

commend the efforts of the revenue collecting departments for creating the

necessary fiscal space for the Provincial Government to undertake its agenda of

social and economic reforms. Much more work would be required in the coming

years to sustain this level of commitment in strengthening provincial revenues.

The accountability of public expenditures was supported by improved

documentation. The first steps were taken through the publication of a medium

term budgetary framework and of a debt management strategy. In the

forthcoming budget a much more comprehensive medium term budgetary

framework would be published as a separate budget document to mark the

commitment of the Provincial Government to medium term planning as opposed

to year to year plans. The adoption of PIFRA and the New Accounting Model

(prescribed by the Auditor General of Pakistan), by the Punjab Government

would lend greater impetus to fiscal and financial accountability.

In the field of expenditure allocation, my commitment to education, health,

water supply and sanitation and other social sectors is reflected in the enhanced

allocations in the forth coming budget. The education sector would receive an

additional grant of Rs.8.3 billion in FY 04-05. The health sector would receive an

additional grant of Rs.3.5 billion in the next financial year. Access to justice

sector including security of the citizens would be supported by an additional grant

of Rs.2 billion. The water supply and sanitation sector would receive upwards of

Rs.3 billion.

In addition to the above a dedicated allocation of over Rs.9 billion would

be provided in the shape of equity contributions, loans and grants to public sector


55

enterprises to finance projects like the Lahore ring road, the development of new

Murree, the development of entertainment facilities like Jallo Theme Park and

IMAX theatre. In addition special funds would be dedicated to the establishment

of Punjab Agriculture Marketing Company and for the activities of the Punjab

Industrial Estate Management Company. Above all, the newly created Punjab

Social Security Hospital Management Company would be funded through a grant

of Rs.470 million to finance health delivery for labour. God willing, the

establishment of a university of excellence in the Punjab Engineering Triangle

would be funded during the course of the next financial year.

I realize that we have embarked upon an ambitious programme of

economic and social recovery. While we are firm in our resolve to translate our

aspirations and plans into a reality, we look forward to all the support from civil

society and stakeholders in the fulfilment of our economic vision.

MAY GOD BLESS YOU ALL!

PAKISTAN PAINDABAD

Documents

Punjab Vision 2020