June 19, 2006	Monday	Jumadi-ul-Awwal 22, 1427

NOTWITHSTANDING all the moaning and groaning that many of us in Sindh are accustomed to— for being ignored and overlooked—, the fact is that a hefty amount of Rs117 billion has been invested in development of the province in the last three years.

In his budget speech on Thursday, the Sindh’s senior minister, Syed Sardar Ahmad said that Rs53 billion spending was done by the provincial government and the rest was funded by the federal government and international donor agencies.

The total development outlay for 2006-07 is of Rs50 billion. Of this, Rs32 billion is the share of Sindh government while the rest has come from the federal government and international donor agencies.

But where has all the money gone? This massive investment in development in a short span of three years should have brought some visible changes in the industrial and agricultural landscape or in the social and physical infrastructure.

However, whatever is coming from Sindh is actually being collected through taxes and shared by Islamabad. The collection of Central Board of Revenue has improved from about Rs400 billion a year to more than Rs715 billion in the current fiscal year. The projected recovery of taxes is Rs835 billion in 2006-07. The increased tax revenues have helped Sindh to convert its negative balance with State Bank to a cash balance of more than Rs13 billion in the current fiscal.

Sindh’s potential of provincial taxes remains dismal and is hardly 10 per cent of its budget. All the tax collecting agencies of Sindh are primitive. The Board of Revenue is one such where patwari is the lynchpin. Excise and taxation give looks of police interrogation centres. Collection of provincial levies is by and large of presumptive and withholding nature as is the case with infrastructure cess.

Sindh’s present affluence, therefore depends entirely on CBR. The budget documents projected initial flow of Rs86.40 billion funds for Sindh. But at the end of day these funds swelled to more than Rs95 billion—a whopping rise of Rs11 billion. For the next fiscal year, the projection is about Rs120 billion. Sindh begins the year 06-07 with more than Rs13 billion carry-over cash. No wonder then Sindh has drawn up a budget of Rs193 billion with a small surplus of Rs302 million.

But the 06-07 budget has raised many questions on transparency and legitimacy of last few years budgeting. On Thursday when the budget was announced, senior officials took pains to ring up every newspaper office till late in evening to convey that the size of budget is Rs193 billion and the accounting system has been changed. Under the new system, the officials say that all entries of income and expenditure have been identified. Income sources and expenditure is specific and identified.

For last few years the practice was to show a bulging current revenue budget deficit and an equally bulging development programme. But at the end of the year, the revenue deficit was plugged and the unfunded development programme financed.

The trick was to keep a few hefty block amounts in the revenue expenditure from where it was taken out to reduce expenditure budget plus deficit and finance the annual development programme. How this practice was overlooked by the Public Accounts Committee is a mystery. But a World Bank team in January this year is said to have taken a hard look at the whole budget making exercise and advised a change.

Nonetheless, with all these controversial book keeping practices, the public spending in last few years increased phenomenally and in fact has broken all previous records, Sardar said but, in the same breath, he spoke of “big infra structure gaps in the secondary cities that need to be filled’’.

He did not mention these secondary cities but Planning Minister Shoib Bokhari identified a few in the post-budget press conference on Friday. These are Badin, Shikarpur, Nawabshah etc. Bokhari disclosed that master plans are being prepared for these cities. The senior minister said private sector would be encouraged to invest.

Karachi remains the economic power house of Sindh and Pakistan even now after it had been a victim of Islamabad’s imprudent policies in last three decades. The city has lost some of its glamour but not tenacity and internal dynamics that has the potential to keep people of all parts of the country together. But, unfortunately at present Badin, Thatta, Shah Bunder and Thar look distant lands from Karachi for want of any physical and social linkages.

In Karachi, most of educational and health facilities are being provided by the private sector and voluntary organizations. In sharp contrast, the people living in the hinterland are, by and large, dependent on the government run education and health care organisations.

Can there be some linkages between private and voluntary educational and health organizations in Karachi with the hinterland. More than anything else it is security which is keeping the urban education and health workers away from the interior.

Industrial plots are now being offered at 25 per cent of the market prices to the investors. But there seems to be very little response to this facility. It is again law and order and of course, electricity and water shortages that is keeping the investors away.

It is true that unlike Punjab, Sindh never received due attention from Islamabad in water-related projects in the past. But in last six years or so, there have been quite a few water projects in Sindh that need to be mentioned.

In the year 2003, President Musharraf offered Rs13 billion package to revamp Sindh’s irrigation system. As happened in the past, Islamabad delayed the release of funds but the project is on. There is another project to divert drain channel to Rann of Kutch instead of polluting Indus. Again it is delay in release of funds but the project is on.

With the World Bank assistance, the Sindh government has drawn up a plan to construct 10 small dams as reservoirs. The announcement of Small Dams Corporation in the budget speech is a part of the programme. The government has not yet spelt out whether there is a plan to involve private sector in construction and maintenance of small dams.

Sindh’s senior minister has spoken rather casually of the areas where the potential investors can be attracted. A horticulture export zone is being proposed to be developed for improving the productivity of fruits, vegetables and flowers at Karachi and seven satellite stations in different cities. These satellite stations will have storage, grading and packaging facilities. “Given a satisfactory law and order, quite a good number of investors can be attracted from nearby Gulf and Middle Eastern countries to invest in such projects’’, a fruit exporter said.

The government is setting up cattle colonies at Mithi, Thata, Tando Allahyar, Shahdadkot which are attractive investment propositions for many in the rural and urban areas. A state of art dairy village and export processing zone is being planned to be set up near Karachi at Ghaggar Pathak under private public partnership.

There is no word as yet how the federal and provincial governments would work to create an environment that facilitate business connections and social linkages between the urban and rural population in Sindh. Without these connections and linkages many of the existing political problems will linger on.