The budget is all about the choices a government makes on behalf of the people for their welfare. The coalition government in Balochistan led by Chief Minister Dr Abdul Malik Baloch has made some good choices for the people and the provincial economy in its budget for the next financial year.
The coalition’s second budget is in many ways a continuation of the economic priorities spelt out by Dr Baloch in his first budget it gave days after forming the government last year – public investment emphasis on the underdeveloped social and production sectors, improvement in security conditions, enforcement of fiscal discipline, increase in tax revenues, development of coastal and mineral wealth, creation of jobs, focus on coal and solar power generation, and involvement of private investor in the development of the provincial economy.
The challenges it faces in implementing its economic and social choices have also not changed: lack of economies of scale in the sparsely populated province that is 43 per cent of the country’s land mass; worsening security environment because of insurgency in some Baloch districts, kidnappings for ransom, sectarian killings; and financial constraints. On top of that, the political compulsions that are part and parcel of a coalition could also add to the impediments, blocking the execution of the social and economic priorities the chief minister has set for himself and his government.
Balochistan plans to establish a Board of Investment and Special Economic Zone Authority to create special economic zones and industrial estates for attracting private investment
It, therefore, isn’t surprising that Dr Baloch government has not been able to fully implement its last year’s budget reforms. It has cut slightly its non-development expenditure for the year to Rs151bn from the original estimate of Rs154bn, but has not succeeded in enforcing financial discipline and check cost overruns.
Nor has it been able to spend all of its allocations of Rs44bn for annual development programme (ADP) owing to the security conditions, demands of the coalition partners and lack of capacity in the official machinery. The development budget has been slashed to Rs35bn and even this amount has not been utilised completely.
The good news is that the challenges confronting his government haven’t dampened his enthusiasm, and the federal government of Prime Minister Nawaz Sharif continues to back him, both politically and financially.
The next year’s Rs215.7bn budget is almost 17pc heftier in size compared with the outgoing year’s Rs198.3bn. The proposed development programme of Rs50.7bn is also higher by 16pc. A concerted effort has been made to curb the revenue expenditure despite adjustment of as many as 12,000 jobs it has inherited from the federal Aghaz-e-Haqooq-e-Balochistan programme in the education and health sectors as well as 10pc raise in the pay and pension of government employees announced by the federal government.
It has already set up the Public Procurement Authority (PPA) to plug leakages in government contracts and plans to establish Board of Investment (BoI) and Special Economic Zone Authority (Seza) to create special economic zones and industrial estates for attracting private investment. The formation of a lean but fully automated Balochistan Revenue Authority will help it collect provincial sales tax on services from the next financial year as part of plan to boost the province’s own tax revenues.
On the development side, the budget has tried to set a direction to achieve its targets in the social and production sectors. “The next fiscal’s budget reflects a significant shift in the direction of the proposed public development investment,” says Kaiser Bengali, a prominent Karachi-based economist who is working as advisor to the Balochistan chief minister since October last year. “You will notice a clear policy bias in favour of the ‘core’ areas of education, health, women development, water supply, energy and road transport in the development programme.”
He admits that the one-year-old provincial government has not succeeded in totally changing the direction of public investment. Yet, he argues, the new emphasis on the social and production sectors signifies a substantial shift from the past practices. He, for example, claims that all the schemes for every rupee the province intends to invest in development have been identified, concept notes on their economic significance prepared, and maps provided where required. The schemes are no longer one-line entries, he says and adds even the role of the provincial legislators in implementation of development schemes from their funds has been curtailed to identification of the projects only.
Published in Dawn, Economic & Business, June 23rd, 2014