Identifying Key Issues in Social Sectors

The increased funding for social sectors particularly for Education, Health and Urban Water Supply is arguably one of the most important financial goals of the current Government of Punjab. Social services are mainly provided both through provincial and local government facilities and programs. The commitment of the Government to these services must be backed up by sufficient financial resources.

In the recent years, there has been a big increase in the public sector budgetary allocation / expenditures for these sectors, which have almost doubled. To explore recent funding and expenditures patterns in the social sectors, it is necessary to investigate allocation to different levels. This raises the question of allocative efficiency – Are funds directed to activities which will provide the greatest gains? Once resources are allocated to different levels, it is important to evaluate how they are used. But a key question is: Are public sector facilities proving to be efficient with the resources they receive in terms of both ‘technical efficiency’ and ‘allocative efficiency’. Technical efficiency is defined as the ability to produce maximum output given a set of inputs and technology. Allocative (or price) efficiency measures success in choosing optimal proportions of inputs i.e., where the ratio of marginal products for each pair of inputs is equal to the input price ratio.

Given the above concerns, Government of Punjab has commissioned this study on Efficiency in Education, Health and Urban Water Supply Sectors of Punjab. The study was to conduct a literature review, analyse government policies, estimate allocative efficiency, collect data, and provide policy recommendations.