KARACHI, April 15: Pakistan’s supreme economic body, the National Economic Council (NEC) is expected to hold its annual session in second or third week of May — tentatively May 15 — but there are no signs as yet of convening of the National Finance Commission (NFC), reliable sources said on Friday. In absence of any NFC formula for resources distribution, the NEC will set arrangement for dividing development funds among the federal and provincial governments on conventional lines during 05-06. The public sector development programme for the next fiscal year 05-06 may be enhanced to Rs230 to Rs240 billion from Rs202 billion in the current fiscal year.
With a growing trade imbalance likely to be close to $6 billion in the current fiscal year, a fast dwindling rupee exchange value, back-breaking double digit inflation and carrying bulging establishments in Islamabad of education, agriculture, health and many subjects that are all essential functions of the provinces, the federal government prefers to give a deaf ear to the noises being made in Karachi, Peshawar and Quetta for better social and physical infrastructure facilities. Even the demands from the components of the ruling parties’ alliance in Karachi and Quetta are being ignored.
A review of the concurrent list of the 1973 constitution by a parliamentary committee now looks a put-up show rather than a sincere desire to make provinces responsible and resourceful. The Senators Committee was formed for this purpose in August 2004 with an announcement that it would give its findings in 90 days. In October 2004, the National Assembly members joined the Committee. This joint parliamentary committee was expected to give report in first week of January. During March and then in April there were several announcements of finalization of the report.
In such a situation, the provinces are left with no choice but to draw up their respective budgets for the next fiscal year on conventional lines. The annual development programmes in the federal and provincial governments are more gimmicks rather than a serious and sincere nation-building effort. In first six months of this fiscal year, Sindh could hardly utilize 18 or 19 per cent of its Rs18 billion annual development programme. So is the case with federal development programme.
Official documents hint at utilization of Rs186 billion out of the proposed Rs202 billion PDSP in the current fiscal year. Taking a cue from the previous budgets, the Sindh ADP for the next fiscal year would be close to Rs21 or Rs22 billion. The big crunch is coming in Sindh’s budget because of the employment being offered to more than 40,000 persons. It is coupled with anticipated 25 to 30 per cent increase in the salaries of the government employees.
The provinces have been asked to give their 05-06 development programmes in context of the medium term development framework for next five years from 2005-06 to 2009-10
Whatever increase in funds Sindh will get from Islamabad next year will be utilized by the wage bill of the employees that will now be over 450,000. The wage bill and operational cost constitutes the bulk of the revenue expenditure and there is very little for real development in the province. In short, the budget of Sindh was financial engineering exercise and remains so now.
The current NFC was constituted in July 2000. It completes five years of its existence next July and can rightfully boasts of the longest serving Commission in Pakistan’s entire history of 57 years. It has so far failed to reach any consensus and has not given any award. But it has contributed in increasing public awareness on the resources distribution arrangement in federation of Pakistan. The NFC award is now a public issue being debated in the streets of the cities and in villages of Sindh and Balochistan.
Very few people took notice of the complete federalization of sales tax in 1974 NFC award. But now when a proposal is mooted to federalize minerals there is a hue and cry and it is nipped in the bud.
It is more than apparent that 05-06 budgets will be based on 1997 NFC award. The 1996 caretaker government was unelected, non-representative and authoritarian. The NFC it constituted was also non-representative. It gave its award in February 1997 when an elected government was about to take over. The year 05-06 will be third in succession when award of this unrepresentative NFC will remain in operation without constitutional validity. It is true that late General Ziaul Haq and Ghulam Ishaq Khan too treated Sindh and Balochistan with contempt. The two NFCs formed in 1979 and 1985 did not do any serious work and retained the old resource distribution formula. There was hardly any notice. But the situation has qualitatively changed.
