The year 2001 leaves Sindh poorer than it was ever before. Its budget is under greater financial strain, because of over Rs4 billion at source deduction in Islamabad during the last six months.

Its fields are now more barren and canals being turned into dry beds because irrigation water share has been drastically cut down. The industrial units are fast turning into junk yards, because both the provincial and the federal governments are indifferent and callous spectators to the crumbling infrastructure facilities in the province.

Sindh looks towards 2002 with little hope. The Rs71.70 billion current revenue budget for the fiscal year 2001-02 has a big hole of about Rs2.20 billion deficit. Its Rs10.425 billion development outlay for 2001-02 depends entirely on the availability of promised funds from Islamabad and potential of Sindh to generate more than Rs4 billion to finance this programme.

The fear is that by the end of June 2002, Sindh will end up its budget year 2001-02 with a total deficit of over Rs6 billion. This will be offset by a drastic cut, on both the revenue and the development expenditure. A drastic cut on current expenditure will render Sindh’s administrative departments inefficient and a slash on development budget will erase even the traces of infrastructure facilities in the province.

During the last fiscal 2000-01 too, the Sindh government took the credit of narrowing down the fiscal deficit from more than Rs4 billion in 1999-00 to Rs1.64 billion. This was achieved after keeping the administrative departments funds starved, virtually on subsistence level. No wonder then, the Sindh government is considered to be one of the most inefficient and corrupt official machinery in the country.

With over Rs4 billion cut in the promised share of federal funds, the Sindh government is beginning the year 2002 with an additional liability of about Rs4 billion on account of pay rise being given to about 450,000 employees from December 2001. “Don’t increase the employees’ pay then”, the federal government is reported to have advised Karachi, when the Sindh government approached Islamabad for financial assistance to meet this additional liability.

Obviously, the coming days are going to be very hard for Sindh government. “Financial management and book keeping is now a nightmare in Sindh”, remarked an officer who is desperately looking for a job in some private company or abroad.

Officials in the Sindh government complain of WAPDA recovering its total demand of Rs6.7 billion “virtually at gun point”, to quote a frustrated officer. This claim was made and recovered despite an arbitration award given by a retired Supreme Court judge that went against WAPDA. Even a few ministers in the present cabinet, though they are all hand-picked and not answerable to the people of the province, are bitter on the way they are treated in Islamabad. “Islamabad bureaucracy is very hostile, when it comes to financial matters”, a minister remarked in a bitter tone during an informal conversation.

Islamabad’s hostility is manifest in fact in last four years of the implementation of 1997 award of the National Finance Commission (NFC) Sindh has received about Rs60 billion less than what was promised in the NFC award. “Add another five or six billion rupees for the current fiscal year, Sindh’s total shortfall comes to Rs65 billion in the five years’ NFC award period.

Due to the incompetency of the Central Board of Revenue, the Sindh government did not receive the budgeted share of the promised funds in the last four years. On this account alone, Sindh has suffered a shortfall of about Rs10 billion in last four years and may suffer another cut in allocation by more than Rs2 billion.

Islamabad has, in fact been applying a double-edged sword all through this NFC award period from 1997-98 to 2000-01. During this period about Rs6.31 billion were deducted at source on account of demands made by WAPDA, the KESC, federal food and agricultural ministry, the PTCL and other agencies. Since 1992-93 Islamabad has recovered about Rs25.70 billion from Sindh by way of at source deduction on account of demands by WAPDA and other agencies.

Sindh’s budget suffers from built-in limitations. Almost 40 per cent of the budget is taken up by the salaries and pensions. This is feared to further rise since December this year, when first phase of pay rise of government employees begin. Its second phase will give another push to this component of expenditure. The second heavy charge on Sindh government’s budget is debt repayment that consumes 16 per cent of the revenue expenditure. The cost of utilities and wheat subsidies are the two other major component of the expenditure budget consuming almost 85 per cent of the total resources.

The priority expenditures in Sindh during the current fiscal year will claim over Rs37 billion. Priorities in the budget are the operation of social services (education and hospitals), debt servicing, grants and compensatory grants to the local bodies institutions. The non-priority areas will consume Rs34.65 billion in the current fiscal. These include general administration, law and order, community services, economic services, subsidies and miscellaneous expenses.

The cut in revenue expenditure is normally applied on non-priority areas which obviously affect the functioning of general administration, law and order. With an indicated allocation of Rs3.57 billion subsidies remain a big chunk of expenditure that is allowed to retain because the influential zamindars whom the government of the day wants to oblige and the corrupt officers benefit from this expenditure.

The law and order is claiming over Rs7.30 billion in the current fiscal year. But the budget documents are silent and the government has not specified how much amount is being spent on the upkeep of rangers. Rangers have been present in Sindh for more than 10 years to help and assist police in the maintenance of law and order. Rangers have taken up the water supply and fishing management. They have been given State Bank of Pakistan residential quarters located in the prime Saddar area, on the book value which is virtually a throw-away price. The Rangers have cut down the water supply connections to Dhobi Ghat, most poor section of the population living in the oldest part of the city.

This being the financial state of affairs, the Sindh government has tried to portray a picture of the province in its recent publication Budget Analysis 2001-02.

“Despite being one of the most resource rich province, more than 50 per cent (of 29.99 million officially counted population in 1997 census) is estimated to be poor and devoid of the most basic necessities of life including adequate nutrition, shelter, drinking water, sanitation, health and education”, a candid observation of an official document, “Budget Analysis-2001-02” released recently. This document warns, “the social and economic development scenario in the rural and sub-urban centres is alarming”.

It says, “the small towns and rural areas present a most neglected look with scant physical infrastructure further fading away for want of maintenance, extremely low human development status, due to rising poverty and low public investments in social sectors”.

On Karachi, “the largest urban city of the country, with its tremendous industrial and commercial base is faced with ever-increasing demand for physical infrastructure and civic amenities caused by the burgeoning population influx which strains the existing urban services and raises the poverty level”.