CLOSE to elections and in an environment of heightened political temperature, the Pakistan People’s Party (PPP) leadership was probably too preoccupied with political wrangling to spare time or attention to focus on the provincial budget.
Last Friday, however, Chief Minister Murad Ali Shah presented a tax-free Rs1.1 trillion Sindh budget without a finance bill and bereft of any indication of a desire for ‘change’.
Based on the recently approved ‘Budget strategy paper 2018-19 to 2020-21’, the inspiration for adjustments made in the budget was not immediately obvious to the reader. The said strategy has been compiled into a detailed report that aims to improve the quality of financial management in Sindh.
Right up to the time the budget speech commenced in the Sindh Assembly there was confusion in the provincial hierarchy about the timing of the budget presentation.
A senior member of Chief Minister Shah’s economic team privately told Dawn that the whole exercise had been treated merely as an annual ritual by the top bosses. Without the PPP leader’s involvement the document had been prepared by ‘babus’ (public officers) based on broad guidelines.
“The PPP is quite confident of its position in Sindh. It does not feel the need to use the budget to reach out to its perceived constituency the way the Abbasi government at the centre did by proposing radical changes to appease its vote bank. Over the past 10 years the PPP has entrenched itself in the provincial power structure and the status quo suits it”, commented a market watcher.
A senior member of the economic team privately told Dawn that the whole exercise had been treated merely as an annual ritual by the top bosses
It is, therefore, not surprising that the chief minster’s ‘progressive budget’ ignored Finance Minister Miftah Ismail’s request to do away with DC rates in property valuation.
What is, however, surprising is the fact that the Chief Minister Sindh did not feel the need to explain his position on the issue which has commanded much public interest. The fate of the real estate sector’s reform package, presented in the federal budget last month, depends on its adoption by all provincial governments.
“I see method in this madness. The PPP is hand in gloves with property barons and so would oppose property reforms tooth and nail. A suggestion from a rival political party or pressure by the courts is not sufficient. For a push back to burst the property bubble and bring housing within reach of the people, citizen activism on the issue is necessary”, commented an expert who was involved in crafting the property package.
To be fair to the PPP it did score brownie points with democrats/electorate by proposing to authorise spending for three months (July-Sept 2018) to provide the next elected provincial government a framework to remodel the budget to its policies and priorities.
“No one can contest that PPP excels in politicking, but after a ten-year rule in Sindh it has yet to prove its credentials at good governance.
“It gave us the constitution, the National Finance Commission Award (NFC), etc, but failed in providing basic amenities including water and public transport to the people. It accepts that it under-performed on human development indicators”, commented an economist who has been gauging economies at sub-state level in Pakistan.
Murad Ali Shah in his speech last Friday stopped short of blaming the centre for the weak service delivery in Sindh. He did lash out at the federal government for delays in the agreed schedule of disbursement that affected progress on on-going development projects. He hammered the need for the 9th NFC award to allow provinces to get their rightful share from the federal divisible pool.
On both the revenue and expenditure side the past pattern has been followed in the budget.
In the outgoing year the tax collection target was revised down marginally by Rs3 billion from Rs199.6bn to Rs196.9bn. An ambitious 23 per cent higher target, translating to Rs243bn, has been announced for the upcoming fiscal.
The composition of taxes is similar to the Centre’s. As much as 85pc will be raised via indirect taxes that is a burden common man.
Despite big landholdings the government showed no inclination to tax agriculture income judiciously. According to budget documents it targets to collect Rs206.7bn in indirect taxes and Rs16.5bn (7pc) in indirect taxes, whereas Rs20bn (8pc) will be collected in non-tax revenue.
Following in the footsteps of the federal government, Sindh also announced a 10pc increase in pay/pension of its employees but stopped short of revising the minimum wage rate.
The house rent ceiling and allowance were raised by 50pc. The minimum pension has been increased from Rs6,000 to Rs10,000, family pension from Rs4,500 to Rs7,500 and for pensioners 75 years and above to Rs15,000.
The overtime rate and permissible hours for lower staff has also been increased. A commitment was made to regularise all contract employees including 24,000 lady health workers. The allocation for maintaining security in Sindh has been increased by Rs10bn from Rs99bn during the current fiscal to Rs100bn in FY2018-19.
On the development side the focus will be on schemes in progress appropriating 80pc of funds. Chief Minister Shah said new schemes of all departments will be financed by 20pc of the development budget, block provision of Rs50bn by the next government. The budget deficit is projected at Rs20.4bn.
Despite depressing health indicators in the province the government chopped the development component of the health budget by Rs3bn. To deal with malnutrition and stunting Rs5.1bn was allocated separately. The minister said in his speech that the next government can add new schemes and finance them from the Rs50bn Block fund.
Development funding in the education sector has been enhanced by Rs3.4bn to Rs24.4bn from Rs21bn. An allocation of Rs6.8bn has been made for transport and mass transit. Agriculture has gotten 34pc more as its development budget was increased from Rs7.7bn to RS10.3bn.
Published in Dawn, The Business and Finance Weekly, May 14th, 2018