Chief Minister Murad Ali Shah who also holds the portfolio of the finance minister in Sindh presented a typical PPP budget last week, high on promises to shield the people of the province from the vagaries of hard economic times.
There is nothing in the budget that suggests any resolve on the part of the ruling party to unlock the development potential of the province by extending the industrial base to smaller towns for employment generation and better harnessing the resource base, curbing market distortions for competition that promotes innovation and efficiency or expanding the tax base to net agriculture income.
Similarly, reforming the government framework to check resource slippages, improving the system of economic data collection for better insight into the provincial economy to identify triggers and barriers to development, putting in place structures to improve the government’s capacity and improving the effectiveness of resource deployment, are off the agenda as well.
Presumably happy with himself and his party, Chief Minister Shah saw no compulsion to deviate from the beaten path that has landed Sindh where it is today — behind Punjab by a distance that has increased under his rule while the people of Sindh continue to wait for the promised want-free future. There might be some improvement in the quality of life in Sindh over time but people deserve better, especially when the post-National Finance Commission federal resource transfers to Sindh multiplied many folds.
The provincial government continues to walk on the beaten path that has landed it firmly far behind Punjab
The 1.7 trillion tax-free deficit Sindh budget gives a generous increase in salaries and a 5 per cent increase in pension of provincial employees, raises education and health allocations significantly, promising an extension in its social security net. Probably keeping the next general elections in sight, the funds for Karachi (neglected for long) have been doubled to Rs118 billion.
The total revenue receipts in the budget are projected at Rs1.7tr posting a deficit of Rs33.8bn. The province will raise barely Rs374bn from provincial taxes against Rs1.05tr federal transfers and the rest is projected to be raised from provincial non-tax and current capital receipts, federal grants and foreign assistance.
Sindh was ahead of other provinces in terms of percentage allocations to education, health and social security for the last few years. By allocating almost one-fourth of the budget, Rs326bn to education and Rs207bn to health, its allocations are 14pc higher than the outgoing year. By setting aside Rs29bn for social protection, the trend has strengthened.
How well education, health and social protection budgets are deployed in the province is another story. Sindh’s comparatively low performance on social indicators is a sad commentary on the state of affairs. The province is lagging behind Punjab in most, and KP in some, key social indicators.
The Annual Development Plan has been increased by Rs110bn from Rs222.5bn last year to Rs332.1bn in the current budget. There are 4,158 total development schemes mentioned, 2,506 ongoing and 1,650 new ones. About 76pc of the ADP of Rs253.1bn is dedicated for the ongoing ones and the remaining Rs79bn for new schemes.
Again, the quality of life, be it the provision of basic amenities or services, the track record of Sindh leaves much to be desired.
There is no indication in the budget of any movement towards financial devolution and transfer of resources to districts and local tiers of the government.
A senior economist termed the current budget ‘uneventful’. In her perception, the PPP government has shifted focus away from major cities and towards neglected districts, which she appreciated.
“Punjab feels like another country. This is very embarrassing. The provincial government needs to put its act together and shun tried tested and failed strategies. Unless they prioritise development, get ready to shake off outdated ideas and purge rent-seekers from their ranks, I see no scope for fast pace regionally equitable growth and transformation in this province.
“Talking market economy is not sufficient. We need to remove barriers to free market for industrial, trade and agriculture development and a higher rate of capital formation is necessary for sustainability.”
A former president of the Karachi Chamber of Commerce and industry, not a huge fan of PPP, was mild in his assessment this year. “The chief minister has finally realised that Karachi can’t be ignored if his party wishes to bag more seats in the Parliament.” He appreciated the higher budget allocation for Karachi but was particularly happy over the attention to industrial areas.
“It is heartening to note that the government allocated Rs1.3bn to reconstruct and rehabilitate roads in SITE (Sindh Industrial Trading Estate). I hope work proceeds speedily.” He mentioned Rs4bn booked for procuring buses for Karachi and Sukkur and hoped for resolution of water supply problems in the mega city.
“I appreciate the allocation of Rs9bn for rehabilitation of evicted families settled along nullahs of Karachi and hope for timely completion of projects.”
Published in Dawn, The Business and Finance Weekly, June 20th, 2022