The average provincial schemes were considerably larger than their district counterparts. In total, there were about 2400 schemes in the provincial ADP of 2006/07, with 623 roads, 286 water and sanitation, 174 health, and 149 education schemes. These translated into average scheme sizes of for example Rs.22 million for roads and Rs.13 million for water and sanitation.

What are the trends in recurrent expenditure, particularly operations and maintenance expenditure? Unfortunately district expenditure data by object classification are unavailable, and therefore non-salary expenditure patterns need to be estimated from

**Figure 8: Composition of the Punjab provincial ADP, 2001/02 to 2006/07**

<!-- Start of picture text --> Distribution of Punjab ADP: 2001/02 to 2006/07<br>Block alloc.<br>9% Education<br>16%<br>Health<br>Others 5%<br>24%<br>Roads<br>Irrigation 27%<br>12%<br>W & S<br>7%<br><!-- End of picture text --> _Source_ : Punjab P&D department total recurrent expenditures taking into account the annual stipulated salary increases. As Figure 9, left panel shows education, health, and ‘community services’ (primarily roads) nominal recurrent expenditures have increased on average annually by 17%, 13%, and 2% respectively from 2002/03 to 2005/06. Given that salary increases have on average been in the range of 10% to 15% annually in these years, suggests that non-salary expenditures have been broadly stagnant in nominal terms in education and health, and have declined in the roads sector. By contrast, provincial recurrent expenditures in these sectors have increased more sharply, growing annually by 48%, 16%, and 12% in education, health, and community services respectively (Figure 9, right panel).

**Figure 9: Trends in setoral district and provincial current expenditures (2002/03 to 2005/06)**

<!-- Start of picture text --> District current expenditures (2002/03 to 2005/06) Provincial current expenditures (2002/3 to 2004/05)<br>180 17% annual growth 250 48% annual<br>growth<br>160<br>140 200<br>120 13% growth 150 16% growth<br>100<br>80 2% growth<br>100 12% growth<br>60<br>40 50<br>20<br>0 0<br>2002/03 2003/04 2004/05 2005/06 2002/03 2003/04 2004/05<br>Education Health Community services Education Health Community services<br><!-- End of picture text --> _Source_ : Accountant General of Punjab, monthly civil accounts This relative neglect of non-salary expenditures, combined with the large size of the consolidated district ADPs relative to the block development grant transfer in the PFC, suggests that districts have reallocated funds from the non-salary PFC grant to fund development expenditures.

The greater focus on physical infrastructure investments, the emphasis on small, localized schemes, and the relative lack of prioritization of operations and maintenance suggests that incentives for providing visible, targeted benefits are even higher for local policy-makers as compared to their provincial counterparts. Water and sanitation and village electrification in particular exemplify this targeting. As Cheema and Mohmand (2006) found in villages they surveyed in Punjab, sanitation and drain provision was being targeted to specific households even 14