June 26, 2006	Monday	Jumadi-ul-Awwal 29, 1427

THOUGH the social security scheme announced in the NWFP budget 2006-07 has not been appreciated by the opposition in the provincial assembly, the move is a welcoming one, particularly for its would-be beneficiaries.

The scheme promises an allowance of Rs500 per month for senior citizens of over 70 years of age. In the first phase, the scheme would be introduced in Kohistan and Shangla districts having the highest poverty ratio among the 24 districts of the province.

It will gradually be extended to other districts as per the official announcement. Apart from senior citizens, the scheme described as a ‘social safety net’, promises monthly allowance of Rs1000 to every post-graduate student.

This allowance will be given to compensate ‘unemployment’ for one year following the completion of post-graduate studies. Similarly, the scheme provides benefits for families of government’s employees who die while in service. Such families would be exempted from paying interest, if the deceased had obtained loan from the public sector Bank of Khyber (BoK) . The government will also wave 50 per cent of the loan payable against its employees who die before repaying the BoK loan.

Officials say that the scheme will be fine-tuned in the days to come and after calculating the total cost of the two welfare measures – the monthly allowance for senior citizens and the post-graduate students. Then the required amount of funds would be allocated.

The government has yet to ascertain as to how many will be benefited by the allowance. Similarly, the government would collect the data about the number of post-graduate students who will be completing their studies during the next financial year and will be eligible for monthly stipends.

The scheme for senior citizens is not likely to cost much because of the simple reason that Shangla and Kohistan do not have big population. Similarly, the number of post-graduates will not go beyond a few thousands.

“Apparently, the welfare allowance will not cost much, as put together, the total amount on account of two measures should not go beyond Rs20 million for 12 months,” says a finance manager of the province.

However, the scheme may help the government to mould the public opinion in its favour before the next general elections and qualify for poverty-reduction funds from the multilateral donor agencies, an official expressed the hope.

Being the first of its kind, the scheme gives an impression to senior citizens that the government is cognizant of their needs.

Besides, if the provincial government can deliver on its scheme, it would also set a parameter of performance for the future governments who may be required to improve the scheme to maintain public support.

The other significant announcement in the budget underlines the government’s plans to create more than 10,000 jobs in the public sector including 6900 jobs in the education sector, more than 2000 in the health sector and some 2500 in the police department. However this announcement, too, has been made without calculating its financial implications. According to conservative estimates, the move to recruit 6900 employees in the education sector alone would increase the annual salary bill by Rs850 million per annum.

Justifying the decision, officials said that several schools will be upgraded during the next year, which would require extra teachers. Similarly, the government is required to fulfil its commitment with foreign lending institutions, which want the government to bring teacher-student ratio to 1:40.

On the development spending side, the government’s proposal to distribute free textbooks among 3.3 million students of the public sector schools, to pay Rs200 monthly stipend to every girl student in remote areas and Rs1000 monthly allowance to female teachers posted in remote areas, also failed to impress the opposition members in the assembly.

Nonetheless, the Provincial Minister for Finance, Planning and Development Siraj-ul-Haq claimed that the proposals have been prepared in the light of the budget presented by the caliph Hazrat Umer. It is a welfare-oriented, pro-poor budget that ensures distribution of funds among different regions of the province by adhering to the principles of justice, he maintains.

However, the worries expressed by the opposition and financial experts are also not unfounded. The Rs26.63 billion annual development programme 2006-07, involving highest ever development outlay, would largely depend on the government’s ability to arrange financial resources on time and by ensuring 100 per cent prudent spending.

On the resource side, the province has projected a surplus of over Rs13 billion on the current revenue receipts. This surplus gets turned into a total deficit of over Rs3.8 billion because of the gap between the resources and projected development outlay.

Though the deficit has come as an opportunity for the opposition members to hurl criticism on the government’s financial plan, the finance managers appear to be relaxed and not worried about it. They know that, in actual terms, the government would not end up with a deficit of Rs3.8 billion for the simple reason that the government would not be able to ensure utilisation of all funds.

On the basis of the past track record of the provincial government’s line departments and project executing agencies, one can say that the provincial development outlay for 2006-07 will not surpass the Rs20 billion mark, which means that in real terms the there may be no budgetary deficit.

The provincial finance minister, Siraj-ul-Haq concedes that the departments do not have the capacity to ensure 100 per cent utilisation. He, however, is convinced that the departments’ capacity could be improved only by setting higher targets for them.

On the revenue receipts’ side, too, the government’s receipts on account of net hydro profits appears to be at the higher side by Rs2 billion. The government, by no means, is likely to receive anything beyond Rs6 billion during the 2006-07 under the arrangement with the Water and Power Development Authority.

However, sticking to its claim for higher amount, the government has projected the net hydro proceeds for the next financial year at Rs8 billion. This will end up raising a total of Rs63.5 billion as revenue receipts during the 2006-07 against the projected amount of Rs65.5 billion of which 92 per cent would come from the federal divisible pool and income heads other than the provincial own receipts.