The balanced Rs1.2 trillion budget presented by the Sindh government reeks of defiance as it is not in line with the federal government’s ‘advice’ to post a surplus, which, many think, would have helped keep the federal fiscal deficit within the permissible limits at least in the accounting books.
“Why should we partake in creating an illusion of better economic management at the federal level through accounting gimmickry?” wondered a provincial leader when approached for comment, implying that it better serves the opposition party if the economic failures of the PTI government remain exposed.
Beyond that, Chief Minister Syed Murad Ali Shah’s financial team did not even pretend to be doing anything radical. “The first budget of the third term is in essence the same as the last one of the second term, which, in turn, was the same as the one before that. It is obvious that new solutions could be found for resolving old issues that have been responsible for Sindh’s underperformance,” remarked an observer.
The success of the public-private partnership model in Sindh, however, has earned support for the induction of the private sector in order to better manage the service delivery, particularly in the social sector.
‘The first budget of the third term is in essence the same as the last one of the second term, which, in turn, was the same as the one before that. It is obvious that new solutions could be found for resolving old issues that have been responsible for Sindh’s underperformance’
“After the completion of multiple public-private partnership projects, including Sindh Engro Coal Mining Company, it is sufficiently clear that the private sector’s role in the development of this province will have to be significant. There are special provisions in the current budget to strengthen this trend,” a member of the provincial hierarchy said.
Issues like the scant and poor quality of economic data, multiplicity of power centres, lack of focus on institution-building and the perpetuation of regressive power structure in rural Sindh have either not been considered or deferred for the time being.
“It will be wrong to assume that the government does not want to serve the people better. The political will is important, but it is not sufficient. There are serious capacity issues in the province. Public servants are either too alienated or too complacent. It is hard to pin down the single most important factor responsible for a different administrative mindset in this province. The outcome is before everyone to see. Despite a rich resource base, Sindh is lagging in terms of progress compared to the other provinces,” a retired bureaucrat, who has served in Punjab for a better part of his career, commented while discussing the current budget.
“Besides increasing the salaries of government employees by 15 per cent and revising the minimum wage upwards, we were penny-pinching, cutting corners to keep the public spending in check. On the revenue side, we have set a realistic target,” commented Finance Secretary Najam Shah. Answering a question about the tax on agriculture-based income, he said the Produce Index Unit (PIU) rates had been doubled in the budget for better mobilisation of resources from the agriculture sector.
Sindh-watchers generally find the provincial budget low on innovative ideas but high on realism. “Problems associated with the resource crunch can’t be wished away. Instead of aiming for the stars, the finance team has focussed on rationalising the income and expenditure projections. For example, in the proposed budget, the numbers indicative of possible bank borrowing and carry-over receivables have been chopped down,” a key member of the provincial finance team told Dawn.
In the government’s publication, Budget 2019-20 at a Glance, the head of bank borrowing has been scaled down by over 90pc from Rs60 billion in 2018-19 to Rs5bn in 2019-20. The carry-over cash balance has also been cut down by about the same percentage, from Rs55bn to Rs5bn, in the proposed budget.
On a question as to why the CM-led team in Sindh did not try harder in the budget to generate an impression of a fresh start as this was the first budget after the 2018 elections, government functionaries said the budget was designed under the politicians’ watch. “Probably they did not feel the need to deviate from policies that won them the elections,” commented a senior officer.
Some others defended it on the ground that the ruling PPP is under grave stress with many of its leaders behind the bars and others being hounded by federal agencies for alleged corruption. “In the current heated scenario, the agenda of economic transformation fails to grab the attention it deserves,” said a private consultant who is informally advising the provincial government.
“Despite the perception of ineffective governance, the PPP was voted back to power in Sindh the third time. The environment may be hostile in Karachi towards the ruling party, but the PPP enjoys goodwill and support in the rest of the province,” said an observer with a keen eye on the evolving scenario in the province. Elaborating, he said that even if people lack access to amenities, they feel politically empowered. Before the PPP rule, they were a forgotten lot, he stressed.
The projected highlight of the budget was a Peoples Promise Programme, a scheme for poverty reduction similar in essence to Ehsaas of the PTI-led federal government except that it also aims at responding to the demand of ensuring better security for the people in Sindh. It targets social progress by enhancing budgetary allocations to education, health and security cover.
Published in Dawn, The Business and Finance Weekly, June 24th, 2019