“WHY are the people of Balochistan not happy with Islamabad when the federal government is investing more than Rs140 billion in mega projects in this province?”

This question was asked by a staunch government party (PML-Q) member and deputy speaker of the Balochistan Assembly, Mr Aslam Bhootani, in an informal chat with this correspondent just before the beginning of budget session of the provincial assembly in Quetta last week.

His own explanation is that the people of Balochistan have neither been given a choice to set their own priorities for development nor are they given an opportunity to participate in the development process.

“The priorities for development in Balochistan are set in Islamabad,'' Mr Bhootani complained to establish how misplaced these priorities are.

“In the last seven years, the government has set up six universities in Balochistan, but hundreds of primary schools in the province are non-functional for want of teachers,” he said and disclosed that 20 primary schools were closed in his constituency in Bela district not very far off from Karachi.

As he put it, the people of his province want facilities for basic education, clean drinking water, health care and a road network that should open up all settlements scattered in the largest province, almost 44 per cent of Pakistan's total area. The Balochistan Assembly deputy speaker, however, appreciated “some good work of the government in extending road network” but there is a need to do much more.

On June 21 Balochistan Finance Minister Syed Ehsan Shah devoted a big part of his budget speech to Rs150 billion investments on development in the province by the federal government. Gwadar deep-sea port, Mirani dam, coastal highway, Kachhi canal, Subukzai dam and Quetta water supply scheme were some of the federal government-sponsored and -funded projects that were mentioned before the provincial assembly. But the opposition members were not ready to hear anything. They were constantly on their feet raising slogans against the government. Even, a large number of members on the government benches were seen sympathising with the opposition members although they were quiet.

There were reasons for the assembly members to be upset on the provincial budget for 2007-08. It offers a meagre Rs13 billion plus development budget that too is largely (over Rs10 billion) unfunded. To be precise, the development budget reflects the budget deficit. This development budget includes no new project. Compared to all three provinces, Balochistan has the smallest ratio of development share in the total budget. It is only 20 per cent of the total budget of Rs63 billion and that too is uncertain and depends entirely on the availability of funds from foreign sources or from Islamabad.

Balochistan Finance Minister Syed Ehsan Shah and Finance Secretary Mahfooz Ali Khan put up a brave face to answer hostile questions from the journalists at a post-budget press conference on June 22. “`We will manage to tide over budget deficit and finance the small development budget,” the finance minister replied to one of such questions. His prescription was to prudently manage expenditure budget. He hoped for some foreign loans and some grant from Islamabad to enable the Balochistan government to meet the deficit and finance the development outlay.

The minister said that there were provisions for 6,000 jobs in the budget, of which 3,000 are in the education department. He did not say it directly, but implied in so many words that the proposed savings will come from the amounts budgeted for these 6,000 jobs which obviously would not be filled to squeeze out savings from the expenditure budget. It means that there was no possibility of closed schools becoming operational in the coming fiscal year too. The structures constructed for dispensaries and basic health units will remain empty and non-functional because of want of doctors, supporting staff and equipment. The development fund spent on construction of these buildings will remain unutilised and illiteracy percentage of Balochistan will not improve. The mortality rate may also increase.

Balochistan may be the richest in resources--mineral, fisheries, fruits etc.-- but has least revenue potential in the country. Provincial revenue is not even seven per cent of the funds coming from Islamabad. This makes the province totally dependant on the federal government to finance its current expenditure and also its development outlay. In 2007-08 Balochistan's revenue generation is estimated at less than Rs3 billion compared to about Rs41 billion indicated from Islamabad on account of its share in federal taxes pool, direct transfers of royalty and share in oil and gas development surcharge .

“The Central Board of Revenue (CBR) collects Rs7 billion tax from entire Balochistan of which Rs4 billion is recovered from just one district Bela'', Mr Bhootani pointed out how cash-strapped his province was. The CBR collects taxes from the Gadani ship-breaking yard, Hub and Vindher industrial estates. The CBR collects the remaining Rs3 billion taxes from Chaman, Dalbandin and Quetta centres. Overall, the trade and industry of the entire province contributes hardly Rs10 billion to the federal and the provincial exchequers which is too meagre when seen in context of thriving domestic trade.

Almost 90 per cent of domestic trade in Quetta and other cities is informal. There are agreements, treaties and memoranda of understandings for cross-border trade with Afghanistan and Iran for almost 20 years. There is some formal trade but the bulk is informal. The entire Balochistan, a big part of Sindh and some parts of Punjab get diesel from Iran. Pakistani diesel is said to be seven times costlier than Iranian fuel and hence its demand is now mounting with every passing day. There is no quantification of the flow of this diesel from Iran into Pakistan through informal channels but leaders in the Balochistan Chamber of Commerce and Industry estimate it in billions of rupees. In a province where deployment ratio of law enforcers is highest in the country, such unabated inflow of diesel through tankers and heavy vehicles keeps everyone guessing.

Many Balochistan legislators are cynic or whatever and are of the view that the more the budget allocation on law and order, the higher the deployment of law enforcement agencies, the more volume of illegal trade of normal merchandise and contraband items’ increase. They have drawn up their peculiar equations to reach conclusions on how crime rates go up when levies are merged with the police in certain areas and how the volume of informal trade swells.

“In the last four years, the budget allocation on law and order has gone up by 50 per cent,” one of the government members of the provincial assembly said. He said this because the merger of levies with the police was increasing expenditure budget. Quite a few bureaucrats-- all of them from outside Balochistan-- consider levies primitive and some sort of personal forces of local tribe chiefs. But legislators argue that levies are much more effective because they operate in the area where they belong. Merging these levies with the police force has exposed them to conventional inefficiencies and corrupt practices of the government and also introduced them to methods of excesses.

Mr Shah, in his budget speech, informed the Balochistan Assembly members that out of 29 districts, the police have been made an effective force in 22 districts. Out of more than 19,000 jobs in Balochistan constabulary and police, he said, more than 16,000 Baloch people have been absorbed to solve the “unemployment problem”. The law and order and administration now claims more than Rs9 billion which is more than 20 per cent of the entire current budget, almost equal to unfunded development outlay.

“At the end of the day, the administration and law and order claims more fund because the availability of finance is certain, but the development programme remains incomplete because of tentative allocation of funds in the budget'', the assembly member said.

“How come the police force is increased every year but schools and dispensaries are kept wanting of teachers and doctors? an angry member asked. Balochistan has become a “security province” rather than a “welfare province” is the conclusion of most of the legislators.

But all is not bad in Balochistan. The government has taken some bold initiatives in developing public-private partnership enterprises that should pay dividends in cash besides improving the technological skills of the Baloch. About half a dozen such arrangements have either already been put in place or are in the process of being finalised.

A company has been formed to exploit metals at Recodec in which the Balochistan government has 25 per cent equity share. The equity is not in cash but by way of provincial government investment in infrastructure and arrangements for water supply. Recodec is said to be one of seven big reservoirs of metals like copper. The Balochistan government will get 25 per cent share in profits plus royalty. The foreign partner is setting up a polytechnic institute for training young Baloch in various metallurgy disciplines. Saindak is already in operation from where 17,000 tons of copper was extracted last year. The government is in negotiation with a foreign company to set up a tourist city on an island near Pasni. A marble city has already been set up where about 130 plots have been allotted. A cement city has also been set up with seven factories in the close neighbourhood.

“What this government has achieved in last five years was not possible in last 50 years”', the minister tried to inform the Balochistan Assembly on June 20 when opposition members were not ready to hear anything.