In the tradition of reviewing the performance of the Annual Development Programme (ADP) at the mid-point of each fiscal year, the National Economic Council (NEC) recently revised the total ADP allocation. The NEC has downsized the ADP by about 12.5 percent, to Tk 208,935 crore (3.3 percent of GDP) from its original budget allocation of Tk 230,000 crore (3.7 percent of GDP). This amount includes Tk 8,935 crore from autonomous bodies and corporations’ own funds. Excluding this amount, out of Tk 2 lakh crore, Tk 128,000 crore is expected to come from domestic sources, and Tk 72,000 crore is to be financed from foreign sources. Out of the total cut of Tk 30,000 crore in the revised ADP, Tk 16,000 crore cut is from domestic financing while Tk 14,000 crore is cut from foreign sources.
Now, what triggered the ADP budget cut in the first place? Three traditional factors are at play here: 1) slow spending; 2) lower than expected revenue mobilisation; and 3) slower external fund flow. But another factor has emerged, which is the “shortage of projects” mentioned by Planning Adviser Professor Wahiduddin Mahmud at a media briefing. The ADP spending in the first six months of the current fiscal year reached Tk 41,876 crore, which was only 17.54 percent of the total ADP budget.
Several sectors have been hit hard by the ADP downsizing, among which health is losing much at a 74 percent reduction from its original allocation of Tk 18,148 crore. This is followed by secondary and higher education, reduced by 55 percent from the original allocation of Tk 28,557 crore. The slow implementation rates of the two biggest social sectors, over the first six months of the current financial year, prompted the NEC to cut down their allocation in fear of underutilisation, which may improve the overall ADP implementation rate at the end of the year. While this makes immediate sense, the underlying causes of historically low ADP implementation of these two sectors should be assessed properly and measures should be taken to ramp up the performance of the two prime social sectors in the country in future.
The Revised Annual Development Programme (RADP) consists a total of 1,330 projects, including 1,108 investment projects, 35 feasibility studies, and 121 technical assistance projects. Another 66 projects are being implemented by autonomous bodies and corporations, using their own funds.
In the RADP, 60.54 percent of the total allocation has been earmarked for five sectors: transport and communication, power and energy, housing and community amenities, education, and local government and rural development. The transport and communication sector received the highest allocation of Tk 38,500 crore, or 18.42 percent of the total RADP. The power and energy sector received the second-highest allocation of Tk 26,186 crore, or 12.53 percent of the total RADP.
The housing and community amenities received Tk 22,730 crore (10.87 percent), while education received Tk 18,550 crore (8.87 percent), and local government and rural development were allocated Tk 15,142 crore (7.24 percent).
Notably, the local government division received the highest allocation of Tk 37,534 crore in the RADP, which includes social safety net programmes and other community-based interventions focusing on poverty alleviation, infrastructure development, and operation and maintenance in city corporations, municipalities, and unions.
The substantially reduced allocations for health and education in the RADP could significantly affect the population. Several ongoing projects—such as the establishment of cancer, kidney, and heart treatment centres in eight divisional cities and 500-bed hospitals in Jashore, Cox’s Bazar, and Pabna—will likely experience major delays in construction work and equipment procurement, resulting in locals not receiving essential medical services in the near future. These critical health initiatives should aim to resume work early in the next fiscal year, given that low-income families cannot access treatment for cancer, kidney and heart conditions at private hospitals due to high costs of service.
Budget cuts in the education sector could push more children out of school. The trend already did much damage during the Covid pandemic, when parents either shifted children from private schools to public schools or madrasas, or took them out of school altogether. Lower expenditure in the education sector may give rise to this tendency once more. Meanwhile, major infrastructural deficiencies exist within government-run educational institutions and training facilities. Additional classrooms are necessary to accommodate students and a lower student-teacher ratio is needed to enable a conducive learning environment. More teachers should also be recruited to this end. A reduced budget for education in the RADP will likely delay the achievement of targeted improvement in the sector.
While reduced allocation is likely to impact the performance of the health and education sectors, the substantial increase in allocation for the local government division may facilitate the creation and improvement of essential infrastructure and services in the city corporations, municipalities, upazilas, and union parishads.
Although no basic reform in local governance is expected over the next six months, ongoing local-level projects (some dependent on donor assistance) will benefit from timely funding and technical and managerial support. Many of these projects/programmes will also contribute to poverty alleviation through employment generation. Ultimately, securing timely development benefits and delivery of expected public services depend on a successful execution of the ADP.
Dr Nawshad Ahmed, a retired UN official, is an economist and urban planner. He can be reached at [email protected].
Views expressed in this article are the author's own.
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