Sindh budget

19 Jun 2020

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ITS resource constraints notwithstanding, Sindh’s budget of Rs1,241bn for the fiscal year 2020-21 indicates the seriousness of Chief Minister Murad Ali Shah’s administration in fighting Covid-19 and its negative economic impact on the poor and small businesses. It is commendable that Sindh has made sensible choices at a time when the country is faced with not only the virus contagion but also the threat of an unprecedented locust plague. The new budget, for example, sets aside a substantial sum of Rs20bn to put cash into the pockets of those affected by Covid-19. Similarly, health expenditure for the next year has been enhanced by 15.5pc. Even the 7pc increase in Sindh’s current expenditure comes from higher Covid-19-related spending. Education is the only other sector — apart from health — where the cash-strapped government has raised allocations instead of reducing it. Additionally, the budget proposes interventions to stimulate small businesses in urban areas through soft loans, alleviate poverty, subsidise wheat flour and support farmers hit by locust swarms.

However, the sustainability of the provincial Covid-19 initiatives largely depends on the federal government’s ability to collect its targeted taxes and transfer the province’s projected share to it. Like other provinces, Sindh also depends heavily on federal transfers for almost 70pc of its revenue receipts. The FBR’s failure to meet its target has caused a hefty shortfall of Rs227bn in Sindh’s projected share, hurting its efforts to implement its development schemes. The reduced federal tax pool has compelled the province to not only slash its development spending next year by over 18pc but to also cut different current expenditures to make room for Covid-19 investments, and subsidise fertilisers, rice seeds and pesticides for smallholder farmers. In his budget speech, the chief minister also spoke about the ongoing attacks on provincial autonomy extended by the 18th Amendment and the efforts being made to somehow force the provinces to give up part of their share from the divisible tax pool to benefit the centre. He rightly called for a unified stand against the once-in-a-century kind of challenges instead of sowing divisions. With Covid-19 and locust plagues threatening to kill people, pull apart the economy and cause widespread hunger, provinces must be made financially more independent than ever before. But they also need to work towards devolving powers to the local level for a better response to pandemics and locust plagues.

Published in Dawn, June 19th, 2020