The economics behind the Lahore Metro Bus Service

Published: February 11, 2013
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Lahore citizens crammed into an operational Metro Bus. PHOTO: ONLINE

Lahore citizens crammed into an operational Metro Bus. PHOTO: ONLINE This is reckless spending which matches the obsessive behaviour of emperors from not so democratic times. PHOTO: AFP

According to the Punjab government, 30 billion rupees is the amount of money spent on the Lahore Metro Bus Service. The actual figure may be a lot more, but let’s just take their word for it and apply a bit of perspective to it instead.

Overall the entire allocated money for Punjab infrastructure development is Rs63 billion which means that 50% or half of the development budget of Punjab was spent in Lahore.

This excludes the cost of the numerous underpasses and overhead bridges that were built in Lahore.

Compare this Rs30 billion to the Rs16.5 billion allocated to the health sector for the entire province of Punjab. Just imagine if this same budget, allocated to the metro service was spent on the health sector instead.

A state of the art hospital like the recently developed Rawalpindi Institute of Cardiology was built within Rs2.8 billion, taking that as our benchmark, we would have been able to build 10 such hospitals with the RS30 billion spent on the Metro Bus!

An interesting perspective, right?

Compare this with the Rs25 billion development budget for education in Punjab for the current year. From this 25 billion a total of Rs5 billion was spent on giving away laptops. Although the goodwill gesture behind the act remains, pragmatism is in severe dearth. Unfortunately, the schools in this country lack basic infrastructure, sanitation and clean drinking water – laptops are a far off dream.

Some may think Punjab as a province is able to afford such shenanigans but a close look at the economic situation of the province gives a very different picture.

In these hard economic times, under the PPP government, it is Punjab that is the worst performing province.

The province’s annual average growth rate of 2.5% between 2007 and 2011 lagged far behind the 3.4% for the rest of Pakistan, according to the Lahore-based Institute of Public Policy (IPP). Over 83% of the Rs783 billion Punjab budget for the current year will be financed by federal transfers and 12% by provincial tax revenue.

The more worrying factor is that Punjab is generating very little revenue of its own and the provincial government has completely failed to address this problem, in fact it is making it worse by spending billions on projects which will further strain the treasury.

Interestingly, very little is being said about the running cost of the Metro Bus Service as the costs have not been ‘calculated yet’ but conservative estimates are that the subsidies would cost the government a minimum of Rs1 billion a year.

This project has the potential to become another state owned bleeding giant.

This is reckless spending which matches the obsessive behaviour of emperors from not so democratic times. Pakistan is set for harder times economically and the leaders are demonstrating absolutely no sense what so ever or any serious intent to address the actual problems this country faces.

I believe that the Metro Bus Service has nothing to offer this country except further economic misery.

* All figures quoted from the Punjab government site.

Read more by Faraz here, or follow him on Twitter @feeraz_khan

Faraz Khan

Faraz Khan

A financial analyst with expertise in banking instruments which are heavily involved in economic down turns; a management consultant and a struggling blogger. Faraz is fascinated by the left 'wingery' in Pakistan and tweets as @feeraz_khan

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.