The Sindh government is setting up a Rs70 billion Pension Fund, Rs50 billion General Provident Fund and a Rs40 billion Social Relief Fund to finance income-generating projects for the poor.

“We have already made a substantial headway in achieving all this'', a senior official of the government revealed while disclosing that more than Rs22 billion have been squeezed out from the last three years’ budgets including the current 2006-07 to set up these three funds.

Under its Accelerated Debt Retirement Programme, the Sindh government in last four years adjusted

Rs15.58 billion cash development and market loans. Only recently in April this year, it retired Rs5.81 billion debt from its cash balance. About Rs1 billion interest has been paid in debt servicing. Not only that Rs1 billion is being saved on account of debt clearance, the Sindh government is earning about Rs1 billion a year from parking of Rs22 billion fund in various banks at competitive rates.

The officials are confident that they would clear Rs28.6 billion remaining CDLs in next four or five years from the foreign loans expected to be flowing in for various mega projects. While these foreign loans will add to the liabilities to the level of discomfort, the Sindh government wants to create fiscal space in the future budgets by clearing CDLs and setting up funds to pay pensions and provident funds.

``A Pension Fund of Rs11.3 billion has already been instituted'', the official said while disclosing that a high level committee headed by the Chief Secretary and several secretaries with representatives the from Securities Exchange Commission of Pakistan and the National Investment Trust has been formed. The government received 15 bids in response to the invitation for expression of interests. .

The committee will examine the bids to appoint a fund manager. The idea is to have an independent pension fund for which the target is Rs50--70 billion, he said. The government squeezed out Rs3 billion from the current budget and plans to take out Rs5 billion every year from the future budgets. In the meanwhile, the government is preparing a directory of all the retired employees.

The officials are also taking on priority basis, the task of setting up a General Provident Fund. So far Rs4.5 billion have been provided for this fund but the officials want to raise amount up to Rs50 billion. The income to be generated from this fund will be utilised for payment of provident fund to the employees who retire. Independent fund manager/managers will be appointed for the purpose.

The Social Security Relief Fund is a new concept being introduced as a poverty alleviation programme. In last two years, the government has earmarked Rs6 billion for this programme while the target is to create a fund of Rs40 billion. A high level committee will manage and administer the fund.

Not only this, the government has started looking after health care of its Karachi secretarial staff by entering into an agreement with a foreign insurance company. ``We will gradually extend this coverage to all parts of the province'', the official said.

While the ambitions are high and the goals lofty, the affairs are going do not seem to be very encouraging. After an investment of Rs53 billion (Rs35 billion by Sindh government plus Rs18 billion from the federal government) in development programme in the province during the current fiscal year, people continue to die of cholera and water-borne diseases, rains inundate cities and villages because of lack of drainage, the number of school-going children remain pathetically low, poverty is too gruesome in rural areas, unemployment is high and law and order is gradually assuming proportions that threatens the social stability Sindh's senior minister Syed Sardar Ahmad in his budget speech in June 2006 had disclosed investment of Rs117 billion in development of the province in last three years of which Rs53 billion came from the federal government. It means that over the last four years-2003-04 to 2006-07 about Rs170 billion has been invested in Sindh. For last four years the Sindh government has given up the practice of releasing a report of budget and economic analysis.

At the beginning of the year, it was claimed to usher in a `white revolution' in the rural areas by promoting livestock and dairy farming. At the end of the day, the prices of milk in Karachi has shot up to Rs34 a litre from Rs28 a year ago, mutton Rs260 a kilogram from Rs220 a kilo and beef about Rs200 a kilogram from Rs140 a kilo.

“Development investment takes time to give results in terms of economic benefits, service delivery and improvement in agricultural and industrial output'', a senior official remarked when asked, `where has all the money gone, he claimed that many abandoned school and dispensary buildings in the rural areas have been put to proper use. Teachers have been recruited, students are being provided with a set of books and a free meal at selected places and medicines are being supplied to the dispensaries and hospitals.

“We have released bulk of the budgeted development funds to the relevant departments and to the districts'', an official said who was unable to explain the utilisation and implementation status of development schemes. A conversation with the officials brought forth that the ruling coalition has managed to bring about some order in sharing of development funds. In the year, 2003-04 and then in 2004-04 the politicians demanded more funds. For this many new schemes were taken up. So much so that 46 per cent of funds went for new schemes and the remaining for the on going schemes.

The World Bank in its report took a notice of dispersal of funds in many new schemes. In the current fiscal year now approaching its fag end, the officials claim that the 75 per cent of the development funds have been allocated to ongoing schemes with more focus on those that are close to final stages of completion and only 25 per cent for the new schemes.

However, political leadership has preferred to remain silent on budgetary and development issues of the province. For the whole year, there has been no official briefing on the review of Rs32 billion annual development programme for this year. There was no explanation as to why Rs32 billion ADP is being expanded to Rs35 billion to accommodate Karachi's Nazim demand for money for certain priority projects. The Rs35 billion has two components. It has Rs8 billion development outlay for 23 district governments and Rs27 billion for the provincial government.

Many district Nazims come from the traditional feudal families. They have their own set of priorities which are to construct roads, irrigation facilities and other projects that benefit them directly or their families and their supporters. The collective interest of the poor people does not figure in their agenda and their political opponents are denied the benefits of irrigation water, electric supply and other facilities.

All said and done, the government is closing the year 2006-07 with a note of satisfaction as it has a cash balance of about Rs15--20 billion after having released all funds for the development. It even met on its own Rs3 billion increase from Rs32 billion to Rs35 billion of the ADP.

Except for tax on agricultural income, hotels and on electricity, the provincial government collected almost 92 per cent of budgeted revenue of over Rs15 billion. The provincial government set a farm income tax revenue target of Rs450 million against which the Board of Revenue mopped up hardly Rs83 million in first eight months. Officials are confident of recovering about Rs150 million in April and May to collect a total of about Rs300 million.

Not only that landed gentry is not paying taxes but is also showing no inclination to pay for the irrigation water being used by them. Against a target of Rs550 million for the entire year, the government collected about Rs160 million in first eight months. Irrigation is one department which is heavily subsidised by the public money. But overall, the non-tax revenue collection of Sindh has remained satisfactory. From a budgeted target of Rs6.70 billion, the provincial government has recovered 74 per cent or Rs3.3 billion.

The planners are now engaged in preparing about Rs210--215 billion budget for the next fiscal year in which the annual development outlay is likely to be around Rs40 billion. Unlike Punjab, where Punjab Development Forum provides an opportunity to bring donors, economists, politicians, civil society on a platform to air views on budget making, Sindh does not have such a platform.. In fact there is no attempt from government to seek views of the business, trade unions, economists, opposition political parties and legislators and civil society.