Achieving economic growth is an important goal of any country. However, in recent years it has increasingly been realised that economic growth is a necessary but not a sufficient condition for human development. Pakistan provides a good example of a country which has historically enjoyed a respectable GDP growth rate and yet failed to translate this positive development into a satisfactory level of human development. Since its independence in 1947, Pakistan’s development policies have focused primarily on realising high economic growth and only incidentally on the task of providing social necessities. Such a process has given rise to a structure of production and distribution which has been only indirectly responsive to social goals. However, there is now a growing realisation that we could have done much better had we stressed human resource investments relatively more.

Fazal Husain

Khalid Hameed Sheikh

Muhammad Ali Qasim

English

Research Papers in Economics

The Pakistan Development Review 
42 : 4 Part II (Winter 2003) pp. 771–780 
 
 
 
 
 
 
An Analysis of Public Expenditure 
on Education in Pakistan 
 
FAZAL HUSAIN, MUHAMMAD ALI QASIM, and KHALID HAMEED SHEIKH
* 
 
I. INTRODUCTION 
Achieving economic growth is an important goal of any country. However, in 
recent years it has increasingly been realised that economic growth is a necessary but 
not a sufficient condition for human development. Pakistan provides a good example 
of a country which has historically enjoyed a respectable GDP growth rate and yet 
failed to translate this positive development into a satisfactory level of human 
development. Since its independence in 1947, Pakistan’s development policies have 
focused primarily on realising high economic growth and only incidentally on the 
task of providing social necessities. Such a process has given rise to a structure of 
production and distribution which has been only indirectly responsive to social goals. 
However, there is now a growing realisation that we could have done much better 
had we stressed human resource investments relatively more. 
The Education For All (EFA) movement, started more than a decade ago in 
1990, accelerated the process of human resource development in many developing 
countries. The EFA refers to the global commitment to ensure that all children would 
complete Primary Education of good quality. A decade after, the Millennium 
Declaration resolved to ensure, by 2015, that all children would be able to complete 
a course of primary education. 
Pakistan, like other developing countries, responded positively to the 
declaration. Measures like the Education Sector Reforms (ESR) Action Plan for 2001-
04 and National Plan of Action (NPA) for education, a long-term framework (2001-
15), indicate its commitment with EFA goals. However, the facts contained in the 
recent Human Development Report reveal an alarming situation regarding current 
human resource status in Pakistan. According to the Human Development Index (HDI) 
 
Fazal Husain, Muhammad Ali Qasim, and Khalid Hameed Sheikh are all based at the Pakistan 
Institute of Development Economics, Islamabad. 
Authors’ Note: This study is a part of a larger study titled “Financing of Education in Pakistan”. 
The authors are grateful to Dr Eshya Mukhtar and Mr Habib ur Rehman for their inputs for the study. The 
authors are also grateful to UNESCO, Islamabad, for providing financial assistance in this regard. Husain, Qasim, and Sheikh 
 
772
ranking, Pakistan is at the 144th place among 175 countries, lying in the Low Human 
Development class. Moreover, it occupies the last position in South Asian region and 
slipped in the low class from Medium class in the last few years. Table 1 presents some 
indicators reflecting relative position of the country in South Asia. 
 
Table 1 
Indicators Showing Relative Positions of South Asian Countries (2001) 
Country  GDP Per Capita  HDI  GDP-HDI  HDI Rank 
Bangladesh 1,610  0.502    7    139 
Bhutan 1,833  0.511    5    136 
India  2,840  0.590   –12   127 
Maldives 4,798  0.751    7    86 
Nepal 1,310  0.499    8    143 
Pakistan 1,890  0.499    –7    144 
Sri  Lanka  3,180  0.730  13   99 
Developing 3,850  0.655     
South Asia  2,730  0.582     
Source: Human Development Report 2003.  
   
The table shows that in terms of GDP per capita, which measures the standard 
of living, Pakistan is better than Nepal, Bangladesh, and Bhutan but lost its position 
in terms of HDI largely due to low achievements in Education sector. The table 
further shows the difference between ranking in terms of GDP per capita and HDI. A 
positive figure indicates that the HDI rank is higher than the GDP per capita rank. It 
can be seen that India and Pakistan are the two countries in the region showing 
negative numbers indicating that these countries rank higher in terms of GDP. Nepal 
and Pakistan are the two countries in the region lying in the low class. 
The above facts suggest that serious efforts should be made to improve the 
status of education sector in the country. Perhaps, the most important factor 
responsible for this situation is the allocation of inadequate resources by the public 
sector to education. This study attempts to analyse the priorities accorded to 
Education by the federal as well as the provincial governments. Since education is in 
large part a provincial responsibility, a comparative analysis of the performance of 
the public sector education in the four provinces of Pakistan would be useful to 
provide feedbacks to the provincial administrations of relative strengths and 
weaknesses of their educational system. Also, differences in priorities and 
performance among provinces provide useful insights, and, more importantly, raise 
many questions for planners. Such an analysis is also necessary for overall resource 
allocation. The analysis will be extended to district level but confined to Punjab and 
Sindh due to data constraints. The study will also examine the disparities in budget 
allocations to education in the two provinces.  Public Expenditure on Education 
 
773
II.  EXPENDITURES ON EDUCATION IN SOUTH ASIA 
We begin our analysis by looking at the trends and patterns of budgetary 
allocations to education in South Asian nations. Table 2 shows the indictors 
reflecting priorities to education in these countries. 
 
Table 2 
Public Expenditure on Education in South Asian Countries 
  As % of GDP  As % of Govt. Expenditures 
Country  1990 1998-2000 1990 1998-2000 
Bangladesh 1.5  2.5 10.3 15.7 
Bhutan Na  5.2  na  12.9 
India 3.9  4.1  12.2  12.7 
Maldives 4.0  3.9  10.0  11.2 
Nepal 2.0  3.7  8.5  14.1 
Pakistan 2.6  1.8  7.4  7.8 
Sri Lanka  2.6  3.1  8.1  8.9 
Source: Human Development Report 2003. 
 
It can be seen that in 1990, the starting point of EFA movement, Pakistan was 
only behind India and the Maldives in terms of allocating resources to education as 
percent of GDP. Over the decade, however, it has lagged behind every country in the 
region. A significant drop in the proportion of GDP allocation to education is 
amasing which casts doubt regarding its commitment with EFA goals. The other 
countries, in general, have increased allocations to education with Nepal showing the 
highest increase. The other indicator, allocations to education as percent of 
Government Expenditures, also shows Pakistan to be in the last position indicating 
that the country allocates least proportion to education relative to its neighbouring 
countries. It is worth noting that Nepal, the other country in the region belonging to 
low human development class showed significant improvements in allocations to 
education over the decade indicating that the country will soon advance to upper 
class. 
        
III.  RESOURCE ALLOCATIONS TO EDUCATION 
IN PAKISTAN 
The above analysis clearly indicates that Pakistan accords least priority to 
education sector relative to its fellow countries in South Asia. We now look at the 
issue closely using National documents. Table 3 provides information on national 
budgets allocated to education over time.  Husain, Qasim, and Sheikh 
 
774
Table 3 
National Education Budget (1995-96 to 2002-03) 
Years  As % of GDP  As % of Govt. Exp.  Recurr(%)  Develop(%) 
1995-96 2.0  8.2  93.87  6.13 
1996-97 2.6  7.9  95.37  4.63 
1997-98 2.3  7.7  93.92  6.08 
1998-99 2.4  7.6  95.09  4.91 
1999-00 1.7  7.6  95.50  4.50 
2000-01 1.6  7.9  96.51  3.49 
2001-02 1.9  8.2  96.29  3.71 
2002-03 1.7  7.8  96.27  3.73 
Source: Economic Survey 2002-03. 
 
The table shows that prior to the start of new millennium the budgets allocated 
to education were greater than 2 percent of GDP with highest allocations in 1996-97. 
A decline in proportion of GDP allocations to education with the start of new 
millennium is surprising and is not in line with the commitment to attach high 
priority to education. It is even more surprising in the light of recommendation 
suggested in the National Education Policy (1998) that allocations to education 
should be enhanced to more than 3 percent of GDP. 
The table further shows that the proportions of education budgets in national 
budgets remained closed to 8 percent over time. Moreover, an extremely high 
proportion, more than 95 percent, of education budgets are spent on recurrent heads, 
particularly on salaries of teaching staff, with negligible proportions remaining for 
development expenditures. 
 
IV.  PROVINCIAL EDUCATION BUDGETS IN PAKISTAN 
Education in Pakistan is a provincial subject.  According to the National 
Finance Commission Award, provinces receive funds from the federal divisible pool 
in accordance with a formula, largely based on the provincial shares of population.  
The provinces then, along with their own resources, allocate funds across various 
sectors, depending on their respective priorities. Table 4 provides information 
regarding provincial budgets allocated to the education sector. 
The table shows that at the provincial level allocations to education sector varies 
between 20 percent –30 percent, Punjab, on average, allocates the highest funds to 
education followed by NWFP. The table also reveals a general declining trend in 
allocations to education. It can also be seen from the table that the major proportions of 
provincial education budgets, like national education budget, are spent on recurrent 
heads. At present, on average, this proportion ranges between 80 percent in Balochistan 
to 95 percent in Punjab. As such, little amounts are left for development expenditures. 
Particularly, in Punjab only 5 percent of the education budget is spent on development 
heads. On the other hand the proportion is close to 20  percent in Balochistan. Public Expenditure on Education 
 
775
Table 4 
Provincial Education Budgets (1998-99 to 2002-03) 
Provinces/Years  As % of Total Budget  Recurr. (%)  Develop. (%) 
Punjab      
  1998-99  31.58  92.10  7.90 
  1999-00  31.44  95.14  4.86 
  2000-01  25.36  94.51  5.49 
  2001-02  24.82  95.64  4.36 
  2002-03  23.59  95.83  4.17 
Sindh      
  1998-99  21.75  85.84  14.16 
  1999-00  21.87  91.35  8.65 
  2000-01  18.95  91.56  8.44 
  2001-02  17.46  91.98  8.02 
  2002-03  19.01  91.52  8.48 
NWFP      
  1998-99  29.18  85.57  14.43 
  1999-00  28.89  86.38  13.62 
  2000-01  24.96  87.59  12.41 
  2001-02  22.42  92.59  7.41 
  2002-03  16.41  79.62  20.38 
Balochistan      
  1998-99  22.18  91.27  8.73 
  1999-00  23.53  73.96  26.04 
  2000-01  20.60  84.14  15.86 
  2001-02  19.64  79.27  20.73 
  2002-03  26.69  79.39  20.61 
Source: Provincial Budget Documents. 
 
V.  ALLOCATIONS TO EDUCATION AT THE  
DISTRICT LEVEL 
With the start of the devolution plan in recent years now districts receive 
funds from the respective provinces in accordance with a formula. The districts then, 
along with their own resources, allocate funds across various sectors, including 
Education sector. Table 5 provides information regarding allocations to the education 
sector at the district level for the year 2001-02. Husain, Qasim, and Sheikh 
 
776
Table 5 
Districts Education Budgets for the Year 2001-02 
Districts  As % of Total Budget  Recurr. (%)  Develop. (%) 
Punjab      
Rawalpindi 59.54  94.76  5.24 
Sahiwal 63.66  95.95  4.05 
Pakpattan 50.28  89.88  10.12 
Khushab 54.80  90.61  9.39 
Kasur 57.16  95.37  4.63 
Sheikhupura 62.88  95.81  4.19 
Bahawalpur 60.84  93.76  6.24 
Faisalabad 64.20  96.57  3.43 
Mandi Bahauddin  56.38  90.68  9.32 
Multan 63.38  97.05  2.95 
Chakwal 55.43  93.83  6.17 
Gujranwala 63.77  94.59  5.41 
Bhakkar 50.16  91.21  8.79 
Lahore 67.04  96.78  3.22 
Attock 56.80  94.36  5.64 
Gujrat 63.58  95.02  4.98 
Bahawalnagar 60.31  95.61  4.39 
Narowal 60.29  93.24  6.76 
R.Y. Khan  62.50  95.91  4.09 
Layyah 55.73  89.99  10.01 
T.T.Singh 57.65  95.63  4.37 
Jhelum 54.79  93.44  6.56 
Rajanpur 49.77  90.11  9.89 
Mianwali 54.20  93.54  6.46 
Hafizabad 62.97  91.07  8.93 
Muzaffargarh 56.61  93.76  6.24 
Sargodha 56.61  94.18  5.82 
Okara 60.17  94.93  5.07 
Vehari 58.23  95.80  4.20 
D.G.Khan 52.60  93.66  6.34 
Jhang 63.80  95.60  4.40 
Khanewal 64.15  94.26  5.74 
Lodhran 54.91  91.41  8.59 
Sialkot 63.32  97.02  2.98 
Sindh      
Karachi 72.14  92.44  7.56 
Ghotki 62.75  96.06  3.94 
N.Feroze 65.19  94.28  5.72 
Sukkur 63.34  94.35  5.65 
Larkana 69.87  96.92  3.08 
Khairpur 66.15  97.38  2.62 
Nawabshah 61.94  96.83  3.17 
Thatta 56.62  95.62  4.38 
Hyderabad 58.89  94.61  5.39 
Badin 57.68  94.06  5.94 
Shikarpur 57.16  96.23  3.77 
Dadu 54.58  98.07  1.93 
Jacobabad 65.17  97.81  2.19 
Mithi 43.96  88.88  11.12 
Sanghar 51.91  94.82  5.18 
Mirpurkhas 59.82  96.02  3.98 
Source: District Budget Reports 2001-02. Public Expenditure on Education 
 
777
It can be seen that at the district level education gets an allocation, in general, 
close to 60 percent. The range varies between 50 percent—67 percent in Punjab and 
44 percent –72 percent in Sindh. However, the major proportions of budgets are 
spent on recurrent heads leaving little amount for development expenditures. In 
general, about 5 percent of education budgets are spent in development heads 
whereas, the proportion is as little as 1.93 percent in Dadu. Only 2 of 34 districts in 
Punjab and 1 of 16 districts in Sindh allocates more than 10 percent of education 
budgets in development heads. 
The relative positions of districts regarding allocations to education can be 
examined with the help of Representation Indices and Gini coefficients. 
 
Representation Index 
The Representation Index (RI) shows the degree of representation of a 
particular group or area with respect to some standardised level. For example, in 
allocation of resources to education sector by a district, a district can be under or 
over-represented relative to provincial level. Specifically, for any district, 
) / (
) / (
T Ti
E Ei
RI =  
Where  
  E = total provincial budget on education  
  P = total provincial budget  
  Ei = ith’s District budget on education 
  Ti = ith’s District total budget  
In other words,    RI = Percent budget on education in district i 
                     Percent of total budget in district i 
 
Gini Coefficients 
The Gini coefficient is a single statistic that summarises relative inequality 
across all groups or areas. The possible range of Gini coefficient is from 0.0, 
representing absolute proportionality or equality, to 1.0 representing complete 
inequality. 
Table 6 contains the statistics for Punjab and Sindh. 
The table shows that slightly more than half of the districts in Punjab and 
Sindh are underrepresented districts in terms of budget allocation to education sector. 
The low Gini coefficients indicate that there seem to be no disparities among districts 
in the allocation of resources to the education sector. Husain, Qasim, and Sheikh 
 
778
Table 6 
Representation Indices and Ginis for Punjab and Sindh 
 Punjab  R.I.   Sindh  R.I. 
Rajanpur 0.832  Mithi  0.701 
Bhakkar 0.838  Sanghar 0.828 
Pakpattan 0.841  Dadu  0.870 
D.G.Khan 0.879  Thatta  0.903 
Mianwali 0.906  Shikarpur  0.912 
Jhelum 0.916  Badin  0.920 
Khushab 0.916  Hyderabad  0.939 
Lodhran 0.918  Murpurkhas  0.954 
Chakwal 0.927  Nawabshah  0.988 
Layyah 0.932  Ghotki 1.001 
Mandi Bahauddin  0.943  Sukkur  1.010 
Sargodha 0.946  Jacobabad  1.039 
Muzaffargarh 0.946  Naushero  Feroze  1.040 
Attock 0.949  Khairpur  1.055 
Kasur 0.956  Larkana  1.114 
T.T.Sing 0.964  Karachi  City  1.151 
Vehari 0.973     
Rawalpindi 0.995     
Okara 1.006     
Narowal 1.008     
Bahawalnagar 1.008     
Bahawalpur 1.017     
R.Y.Khan 1.045     
Sheikhupura 1.051     
Hafizabad 1.053     
Sialkot 1.059     
Multan 1.059     
Gujrat 1.063     
Sahiwal 1.064     
Gujranwala 1.066     
Jhang 1.067     
Khanewal 1.072     
Faisalabad 1.073     
Lahore 1.121     
Gini 0.041    0.065 Public Expenditure on Education 
 
779
VI.  EDUCATION BUDGETS AND LITERACY 
The low priority accorded to the education sector, especially in development 
expenditures, may cause variations in the literacy levels among various districts. It is 
possible that expenditures on education and literacy levels are interdependent with 
each other. The study by Husain and Qasim (2003) shows that there exist large 
disparities in Punjab and Sindh in terms of literacy rates. Districts like Rajanpur, 
Muzaffargarh, Lodhran, D. G. Khan, etc., in Punjab and Mithi, Thatta, Badin, etc. in 
Sindh which are highly illiterate also allocates less budgets to education relative to 
others. To see the possible correlation between the literacy level and the expenditure 
on education by districts we calculated rank correlation between the two and the 
Spearman’s rank correlation for Punjab and Sindh came out 40 percent and 51 
percent respectively. Furthermore the rank correlation test is significant at 5 percent  
for the two provinces. The positive and significant correlation between district’s 
literacy rates and district’s allocation of funds to education implies that without a 
significant increase in allocation of funds to education especially, for development 
purposes, the attainment of EFA goals would be a nightmare.   
 
VII.  CONCLUSIONS 
The study analysed the allocation of funds to the education sector at various 
levels. At the provincial level allocations to the education sector as percentage of 
total budget stands between 20 percent to 30 percent. The major proportion of 
provincial education budget is used to meet the recurring expenditures, the 
expenditures meant for the maintenance of existing national assets. The development 
expenditures, necessary to generate future national assets, on the other hand are less 
than ten percent for Sindh and Punjab where as for NWFP and Balochistan it is 15 
percent to 20 percent of the total education budget. The allocation of resources at the 
districts of Punjab and Sindh depict the similar picture as for the provincial level. 
There is no disparities between the districts on allocation of funds to the education 
sector. It is, however, noticed that there is a positive correlation between the 
district’s literacy rates and the district’s allocation of funds to education sector. It is 
recommended that to meet the EFA goals, allocations to the education sector, 
especially for development expenditures, needs to be enhanced.                 
 
REFERENCES 
Ali, Karamat. (2001) Pakistan: The Political Economy of Human Resource 
Development. Lahore: Vanguard. 
Finance Department (Various Issues) Budget Documents. 
Husain, F., and M. A. Qasim (2003) An Analysis of Inequality in the Literacy Levels 
in Pakistan. Presented at the 18th Annual General Meeting of the Pakistan 
Society of Development Economists, Islamabad. January 13–15. Husain, Qasim, and Sheikh 
 
780
Mahmood, Naushin (1999) Educational Development in Pakistan: Trends, Issues, 
and Policy Concerns. Pakistan Institute of Development Economics, Islamabad. 
(Research Report No. 172.) 
Sarmad, K., F. Husain, and G. M. Zahid (1989) The Education Sector in Pakistan. 
Pakistan Institute of Development Economics, Islamabad. (Research Report No. 
156.) 

An Analysis of Public Expenditure on Education in Pakistan

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