SINDH Finance Minister Murad Ali Shah sounded convincing when he discussed provincial autonomy and fiscal decentralisation in his budget speech and at the press conference held later. The part where he dealt with provincial income and expenditure, however, aroused scepticism more than interest amongst the listeners.

“Governance is not their strength. They like to drag everything into politics. No matter what numbers they throw the sliding social indicators and the widening development gap with Punjab spill the beans. This is despite post-NFC higher resource transfers. But it is not enough. They want more”, a businessman, bitter over the quality of governance in Sindh and critical of demand of more resources from centre, commented, hinting at corruption.

Reacting to the observation above, a senior member of the provincial cabinet called it an ‘image problem’ of the Sindh government. Using an old adage his response was interesting.

“Scepticism is a heavy armour. More than Sindh it is the prejudice against the PPP that is hard to shed for the elite class. The bias is so deep- rooted that even after being voted to power twice the credibility of the ruling party in Sindh is still being questioned”, he protested.

“Had the party really been a failure of the proportion projected by the urban elite, the people of Moro and Sanghar wouldn’t have voted it to victory in by-elections against resourceful Jatoi’s a few weeks back”, he argued.

Murad Ali Shah is trying to mobilise more resources locally but without widening the tax net or increasing tax rates

The Engro group executives vouch for the Sindh government’s commitment to development in the province. Recently Khalid Mansoor, CEO Hubco, told Dawn that the infrastructure projects in Thar were completed satisfactorily in record time.

“Everyone thought the Thar coal mining project was not doable. Even our private sector partners waivered more than once over the past two years. The federal government was reluctant to support and dragged the issue of sovereign guarantee demanded by the Chinese lenders but we managed to put everything in place and the biggest public private partnership project in the country is progressing at a satisfactory pace”, asserted an official in the provincial ministry of finance.

He did not dismiss the impression that the province suffers owing to the absence of a strong single leader and a clear chain of command. Despite such political drawbacks he believed Sindh leads Punjab on the path of revenue generation at sub national level and has encouraged public private partnership to accelerate the pace of development. Given the complexity of the situation with competing interests and their political dimension the budget- making is a challenging job but the government has been managing it well.

The provincial budget proposals, contested by the opposition, broadly follow the direction set by the federal government. The Rs869bn budget projects a deficit of Rs14.6bn. For resources it relies on federal transfers of Rs561bn, hopes to raise Rs166bn locally and expects to receive Rs127bn from other sources. On the expenditure side Rs225bn have been allocated for the annual development plan.

Murad Ali Shah is trying to mobilise more resources locally but without widening the tax net or increasing the rate of taxes. He actually brought down the rate of sales tax on services from 14pc in FY2015-16 to 13pc for the year ahead.

The Sindh government like other federating units was well aware of the high tax revenue potential of the agriculture sector and property. In the absence of any public pressure it showed no inclination to realise the potential revenues for fear of stepping on its own toes.

“How can you expect a government servant to dare press for measures that hurt the interest of the leadership of the ruling party? Look at the class composition of PPP members in the provincial assembly (MPAs). Even those who are not feudal are propertied and often active in the real estate market multiplying their assets. Like many others they talk of people but do not necessarily care for them, less so if it hurts their interest”, a finance ministry official reacted when probed on the issue.

Just a day or two before his sudden death on May 3 late Tashfeen Niaz, Chairman, Sindh Revenue Board, told Dawn that the Sindh Revenue Board has moved a summary with proposals to make the province more financially independent. Beside other suggestions he proposed to bring private operators minting money in health and education into the service tax net. “We do not have a magic wand. If the government wishes to increase revenue it will have to either broaden the tax base or increase the tax rate”, he was clear.

The officials at the provincial department of finance defended the government policy that, they said, was based on the belief that lower rate of service tax will incentivise non tax payers to comply.

In his speech Murad Ali Shah reiterated the Sindh government’s order of priority in the social sector education followed by health, security and local government. Inspired by the PMLN’s focus on highways and motorways the province allocated higher sums for road building at the cost of necessities such as steady supply of potable water to households in Karachi and the rest of the province.

The focus remained on the completion of ongoing schemes and launching of new projects that can be completed by early 2018, when the next general elections are scheduled.

Published in Dawn, Business & Finance weekly, June 20th, 2016