PUBLIC investment in social and economic infrastructure development is the most important tool a provincial government can wield to boost economic growth for alleviating poverty and creating jobs. But it is observed that Balochistan has not been able to make any noticeable progress in mitigating widespread poverty despite a substantial rise in its budget allocations for development post 7th National Finance Commission (NFC) award.
Balochistan, for example, has almost doubled its budget allocations for the annual public sector development programme (PSDP) from Rs54.5 billion in 2015-16 to Rs108.1bn for the present financial year. Even the revised estimates for the provincial development programme show a spike of more than 62 per cent to Rs81.9bn, yet this growth in funds is not complemented with improvement in the social and economic outcomes in the province. Instead, we have seen the province’s development throw-forward spike to Rs288.9bn at the close of the previous fiscal year in June 2019.
There are a number of factors that have contributed to the increased inefficiencies in public development investments: lack of institutional or departmental capacity to implement schemes, different political lobbies exerting pressure on the government to fund schemes with little or no economic benefit, an underdeveloped private sector, rampant corruption and wastage of funds, and so on.
To improve the efficiency of its development expenditure and increase its impact on provincial, social and economic infrastructure, the Jam Mir Jamal Kamal Khan Alyani government has now finalised a draft Balochistan Comprehensive Development Strategy, which will provide the legal and regulatory framework for the development of the province and help the government gradually move towards medium- and long-term planning. “The strategy will help the government in allocating resources according to the targets set during provincial development planning,” provincial finance secretary Noorul Haq Baloch told this correspondent last week.
Additionally, the government is also working on finalising sector plans for education, industries, mines, agriculture, livestock, local government, women development and energy. These sector plans comprising provincial policies and strategies will be used in the preparation of the annual development plan. The provincial planning and development department has developed the Balochistan Planning and Development Manual in order to have a proper policy guideline for implementation of the provincial PSDP in addition to drafting a monitoring and evaluation framework.
The budget documents for the next financial year show that the development sector reforms initiated by the present provincial administration in the last two years have helped it bring down the province’s development throw-forward by a fifth to Rs230.4bn by emphasising the completion of incomplete, ongoing schemes whose number has been brought down from 1,515 to 665. This will provide the government more space to start work on new projects and enable it to allocate more funds for ongoing schemes for their early completion.
Besides improving the efficiency of its development spending, Mr Baloch said the government is implementing financial reforms. It has also tabled the Public Finance Management Bill 2020 to improve financial discipline. With the passage of the bill, Balochistan will become the first province to meet this constitutional obligation. Additionally, the government has already set up an internal audit unit, a revenue management unit and a debit and investment unit to strengthen public finance management.
He said the major policy objective of budget and financial reforms is to protect the province’s annual allocations for development. For instance, he argued, the reforms have helped the government keep its revised development expenditure for the current financial year at a significantly high level of 76pc of its original budget estimates despite the severe economic impact of the Covid-19 pandemic.
The operational shortfall of Rs87.6bn in its next year’s budget with a total consolidated outlay of Rs465.5bn is apparently also meant to protect the provincial development allocations of Rs106.1 billion, according to the provincial finance secretary. A cursory glance through the budget documents shows that the projected provincial current expenditures are exaggerated and inflated. This leaves the provincial government just a little over Rs18 billion from its own resources to finance its next year’s provincial PSDP.
“This is part of our plan to spend maximum funds on development schemes. We will meet the resource shortfall for development through savings and cuts in our current expenditure. This is how we have managed it this year,” Mr Baloch concluded.
Published in Dawn, The Business and Finance Weekly, June 29th, 2020