THE PPP government in Sindh might have succeeded in containing the sense of alienation in the native population, but has fallen far short of delivering promised better life to its voters.
In critical areas like social/physical services or wider access to economic opportunities, its performance is much below public expectations.
In the second last budget of the provincial government, according to the officials, the focus would be on completion of the ongoing visible development projects and financing of short-term (two year completion time) new projects. Despite the multiple proposals from tax collectors to widen the tax net to realise service tax potential in the province, the political leadership is not likely to endorse proposals for fear of political blowback.
‘There is persistent pressure to collect higher revenue. But there is reluctance to broaden the tax net as it is seen to be politically risky’
The upcoming budget, therefore, is expected to be more of the same, a complex jugglery of numbers laced with tall claims and some lame explanations for missed social targets.
The management of Sindh’s public finances has improved significantly under the PPP rule. It leads the three other provinces in revenue collection, spends an average 25pc of revenue on development, shuns the practice of pledging resources for new schemes without completing the old ones, but has not been able to stem the slide of social indicators trailing not only behind the national average but even Khyber Pakhtunkhwa.
The dichotomy is too glaring — recounted in several reports compiled by donors and independent research outfits — to be brushed aside. The policymakers and the provincial bureaucracy did not even pretend to be surprised over the situation.
The reasons for the malice is attributed by politicians to Sindh’s peculiar demography, ensuing ethnic and rural/urban divide, deep seated culture of corruption and political polarisation.
Others pin it on the absence of a clear unity of command that they believe suppresses the positive energy and slows down the decision-making.
“When several centres of power operate parallel to each other without a close coordination, the outcome would always be a chaos. Anyone committed to Sindh’s economic and social progress must clear the confusion to instill a drive in the provincial machinery to excel,” an enterprising officer who opted out of the mainstream departments told Dawn a few weeks back. He was hinting contradictory signals coming down from Larkana, Bilawal House and Dubai.
Last week the finance department circulated the Budget Strategy Paper (BSP) for approval by the cabinet. The strategy paper that calls itself ‘a leap forward’ is a three-year rolling plan, prepared with assistance of global development partners. The strategy also deals with governance reforms to address ‘systemic weakness and missing links in public financial management such as credible budget forecast, policy-based budgeting, transparency in accounting and reporting’.
According to BSP the provincial revenue including federal transfers, provincial-own-tax and other revenue receipts, is expected to shrink by 6.33pc during the current fiscal with a shortfall in revenue assignments and non-tax receipts. It projects 15pc annual growth in revenue over the next three years, with growth of 16pc in revenue assignment, 10pc in straight transfers, 34pc in federal PSDP and 15pc in provincial tax revenue.
“There is a persistent pressure to collect higher revenue. At the same time there is a serious reluctance to broaden the tax net as it is perceived to be politically risky. To me 15pc greater collection target is unrealistic if the tax net is not widened and PIU (produce index unit) assessment rates for agriculture are not revised upwards. It wouldn’t be fair or effective to squeeze more out of same set of taxpayers,” a senior official in the Sindh Revenue Board commented informally.
The BSP projects that the total expenditure (excluding investments and loan repayments) will shrink by 5.6pc against budget estimates during this fiscal year, development spending down by 19pc and recurring expenditure by less than half percentage point.
Over the next three years, the total spending will grow by 13pc, with development outlay growing by 20pc and the current expenditure by 11pc. This BSP considers ‘a healthy paradigm shift in allocation efficiency with funds flowing towards deficient areas to improve service delivery. The framework paper pins blame on the lack of management capacity and fund releases for delays in project implementation.
It acknowledges that disparities in household incomes and regions within the province are not only pronounced but widening. “As per head count index 2010-11, the incidence of poverty in Sindh was 43.1pc against 39pc national average. The disparities exist across districts in accessing education, /health services, clean drinking water and sanitation. The social indicators in urban Sindh are far better than rural.”
The strategy paper deals with social and economic development including GDP, labour force, agriculture, natural resources and fiscal position, but there is no mention of industry in a province where biggest industrial zones are located. So much for the vision of planners entrusted with daunting challenges.
Published in Dawn, Business & Finance weekly, May 30th, 2016