THE proposals of Sindh’s Rs726bn budget for 2015-16, announced on June 13 and being debated in the provincial assembly, have not addressed the issue of investors’ trust deficit or generated energy in the key sectors to rapidly develop the provincial economy and close the widening development gap with the galloping Punjab.

The consolidated development budget of Rs213bn (provincial Rs142bn + foreign-assisted projects Rs 26.9bn + federal PSDP Rs9.6bn + district Rs20bn + viability gap fund Rs15bn) focuses on completing 1,762 ongoing schemes with an allocation of Rs106.1bn. The provincial development spending of Rs35.8bn is earmarked for 590 new schemes.

In 2014-15, the throw-forward of ongoing schemes was Rs700bn. This has been curtailed to Rs554bn at the start of 2015-16 as 318 schemes were completed in the outgoing year.

“We intend to complete about 600 schemes next year to bring down the throw-forward amount significantly,” Sindh Finance Minister Murad Ali Shah said in the post-budget press conference.

“We realised that urban development did not get the attention it deserved earlier, so the emphasis on visible urban development allocation has been increased by 18pc, from Rs42bn in 2014-15 to Rs49bn in the current budget,” he added.

However, leaders of the province’s farming and business communities were not impressed and expressed disappointment at the ‘routine exercise’. They believe the alarming provincial situation demands radical changes in the policy orientation, out-of-the-box solutions to address the governance challenges, and a thrust on capital formation to better harness Sindh’s resources in men and material, limit wastage and arrest the capital flight.

“After the 18th amendment, the provinces were vested with the main responsibility of managing and developing agriculture and the social sector. The perception is that over the past two years, the performance graph has dipped. It is time to start reporting the state of the provincial economy annually to sift facts from fiction and to plan better,” commented Muhammad Nawaz Shah, vice president of the Sindh Abadgar Board, over phone from Hyderabad.

Meanwhile, the provincial finance minister, in his press conference on June 14, held the federal government partially responsible for the slow pace of economic growth in Sindh. He was critical that Sindh was being ignored again in next year’s proposed development allocations.

“Sindh received Rs287bn against Rs403bn promised in the budget which came down to Rs353.7bn after two downward revisions. We are hoping to receive Rs60bn before the current fiscal year ends on June 30,” were his opening remarks at the press briefing.

“Sindh’s share in the PSDP has been reduced from Rs22.4bn last year to Rs9.5bn in the proposed budget 2015-16, even though the size of the PSDP has been increased by 10pc,” he added.

The private sector representatives endorsed the finance minister’s complaints against the federation. They maintained that harmony can only be achieved in diversity by treating smaller federating units fairly. They said the federal government must honour its commitments of resource transfers.

“However, everything that is wrong in the province can’t be traced to insufficient fund inflows from the federal government,” a leading medium-sized farmer from Nawabshah commented, airing the sentiments of his community.

“The federation did not stop them from devising a trust-building strategy in Sindh to nudge businesses to invest here. For the last two years, there have been huge surpluses in agriculture and farmers are not getting a fair price for their produce. There are reports of rural markets operating below the support price levels in a number of essential commodities. Are these problems frivolous? What is there in the Sindh budget to respond to these challenges,” another farming community leader argued.

Talking to Dawn before the budget, finance minister Shah admitted that the pace of development in Sindh is less than its potential, but the situation is better than the perception. “I can provide you the list of 300 projects that we completed this year. These include both social and physical infrastructure projects,” he defended his government’s performance.

Sindh Board of Investment’s former chairman Zubair Motiwala was critical about the government’s attitude towards industry, which, he believed, was being treated as a federal subject.

“It is absolutely necessary that the Sindh government understands the value of investment in trade and the industiy. The resource-starved public sector can’t finance industrialisation. If it seeks growth and prosperity, it will have to initiate a trust-building programme for the reluctant private sector, which prefers locations outside Sindh for future investment,” he said.

“About 2,000 Memon business families have moved out of their home province. Some have shifted to Lahore and Islamabad with their families, while many have located their families in the UAE and are weighing options to relocate their businesses from Sindh,” a leading business leader of Karachi said.

“Can you blame the people for their frustration? The people of Sindh were at the forefront in reviving the democratic order. They value political freedom, but that is hardly an end in itself. They now aspire for economic freedom. The dole-outs are not going to solve the problems of poverty and unemployment. The economic base has to expand for capital formation. Nothing will work unless the people are fired up with energy to make it happen,” commented an analyst.

Published in Dawn, Economic & Business, June 22nd, 2015

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