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Provincial budgets with social bias in different flavours

Updated June 24, 2013
Measures were announced to improve resource generation but a sense of urgency to tax money-minting classes was missing.
Measures were announced to improve resource generation but a sense of urgency to tax money-minting classes was missing.

THE budgets of the four pro-vinces — Balochistan, Khyber Pakhtunthwa, Punjab and Sindh — each led by a different political party, presented last week, were distinct in character, and displayed more pronounced, yet varying levels of social bias.

The parties deserve credit for giving their respective budgets a flavour of their political vision, despite a close deadline for presenting them. The challenge was certainly much greater in volatile Balochistan and KP, where the National Party (NP) and the Pakistan Tehreek-e-Insaf (PTI) assumed government leadership, respectively, for the first time.

All the federating units pledged to adopt austerity for freeing resources to finance people’s welfare and develop the provincial economies.

In Sindh and Balochistan, the budgets were presented before lawmakers by chief ministers Qaim Ali Shah and Dr Abdul Malik Baloch. In Punjab and KP, finance ministers Shujaur Rahman and Sirajul Haq spelled out budget proposals on the floor of their respective assemblies.

It is not easy to compare the provincial budgets in a short span of time, because of the variation in size, natural endowments and the level of progress in each province, resulting in peculiar economic needs woven into complex, common as well as diverse, socio-political challenges.

Still, an attempt has been made to look at the key financial document on the basis of expenditure patterns, resource mobilisation trends and fiscal imbalances.

The fact that all four governments presented deficit budgets demonstrates the ambition of the ruling parties to stretch spending in exercise of their investment choices in their region of influence. Besides, salaries and pensions of government employees have been increased in the range of 10-15 per cent.

Some measures were announced to improve resource generation, but a sense of urgency or seriousness to tax effectively rich farmers or other money-minting classes that fall in the provincial ambit, was missing. Sindh is comparatively ahead of the other three provinces in resource mobilisation, particularly through the collection of GST on services. It has expanded the base for service tax collection and has proposed to include income generated by marriage halls and beauty parlours. Event management outfits will also be asked to contribute. It hopes to enhance tax revenues in the province by 40 per cent in a year.

In Punjab and Sindh, where voters reinstalled the party that was in power before, the budget exercise was more of the same. In KP and Balochistan, a departure from the earlier patterns is noticeable, more prominently on the expenditure side of the budget.

In Sindh, the PPP is sticking to its priorities, though it has given marginally more weight to demands of urban areas to appease the Muttahida Qaumi Movement (MQM) by making allocations for projects like the Karachi Circular Railway.

Unlike Balochistan, the Sindh government is sticking to its guns on constituency uplift programme. It continues to allot a major chunk of the development budget to MPAs to carry forward schemes in their respective constituencies.

While there projects like Thar coal, for which Rs32 billion was allotted, the overall focus of the Sindh budget is again on redistribution, as opposed to wealth creation.

To counter criticism on the federal budget presented earlier, the PML-N seems to have adopted a milder resource mobilisation approach in drafting the budget of its home province. The focus seems to be on its signature infrastructure projects, though some less expensive populist schemes, particularly for the youth and poor, have been introduced.

To walk the talk of change and turning the KP in to a model province, PTI has enhanced spending on social utilities, but fallen short of giving a strategic roadmap for the revival of the provincial economy.

The nationalist NP government of Balochistan has made a humble start by declaring to focus on investing in human capital and improving the security situation over the year ahead for putting the provincial economy on the path of sustainable development.

The Pakistan Peoples Party gracefully accepted its Election 2013 defeat. It, however, failed to depict any move towards change in the budget to win back the lost support in the country by better managing Sindh. It does not seem to have taken serious interest in budget-making, maybe because it is still in the process of digesting its ouster in the elections.

Chief Minister Qaim Ali Shah’s Rs617.2 billion budget, in which expenditures surpass the revenue target by over Rs21 billion, ignores the public outcry for containing the politics of patronage, which deepens the divide in a fragmented society.

Punjab Finance Minister Shujaur Rahman presented a Rs931.6 billion budget that is little less than the combined budgets of the other three provinces. It has allocated resources for many typical Nawaz Sharif projects of roads, highways, power plants and irrigation canals in the province. The budget was more populist than the federal budget’s, given the provincial responsibility of social sectors under the country’s constitution.

For revenue generation, the Punjab budget taxes residential properties of two to four kanals at the rate of Rs1-5 million, depending on the size. It did promise to implement an earlier piece of legislation to tax agriculture income.

KP Finance Minister Sirajul Haq was articulate and made a budget speech that impressed even his detractors. He announced a Rs344 billion budget with a deficit of Rs10 billion. He said that KP’s expenditure over the year ahead was divided into three parts: welfare 48 per cent, development 34 per cent and administration 18 per cent. As compared to health and education of seven per cent in Punjab, the PTI-led government pledged a whooping 32 per cent of the budget to these two sectors.

Balochistan Chief Minister Dr Abdul Malik Baloch presented the last in the series of provincial budgets. The Rs198.3 billion Balochistan budget shows a deficit of Rs8 billion. To deal with the sense of deprivation and frustration in the people of the province, and to revive development to catch up with other regions of the country, allocations for public welfare were increased.

The budget allocates 24 per cent of its total outlay — Rs34.8 billion — to education, which is 45 per cent higher than the current fiscal. A sum of Rs15.2 billion has been allocated for health, which is a big 37 per cent hike from the last budget.