The second and third weeks of June buzzed with budget tales. The Federal and Sindh Budgets were announced with a hoard of claims by the governments. Amongst them included the repeated assurance to boost certain sectors with larger than previous allocations.

Some of these sectors such as housing and community amenities were of direct relevance to cities. Mega cities such as Karachi are confronting several problems due to their size, social complexities, falling standards of urban governance, over-emphatic reliance on federally-funded mega projects, rising informal settlements, decaying law and order control and diminishing avenues of employment which in turn are giving rise to abject poverty.

That poverty and hopelessness is a reason for breakdown of law and order can not be absolutely denied. As a prime measure of the financial policy of the regime, how do provincial and federal budgets respond to some of the acute issues faced by the city are to be seen very carefully.

According to the budgetary rules, the CDGK had already distributed its budget document in April 2004. The city budget, which envisaged an ambitious Rs15.59 billion development spending, heavily relied on the grants and releases from the provincial and federal governments.

Equating it with the net transfers from the federal government to Sindh which stand at Rs72.7 billion, the development spending on Karachi alone shall account for over 20 per cent of the allocation proceeds.

This however remains to be seen as to how and in what trail will this money be released to the earmarked development schemes. Going by the statements of the Karachi Nazim, the fate of the ongoing 'Tameer-e-Karachi Programme' shall depend upon the timely release of funds from federal/provincial governments.

With CDGK and other tiers of government locking horns on various issues related to governance, the realization of the various development schemes as per design, specifications and time table seems to be a remote possibility.

Little emphasis has been given to the devolution of power to the localities in the federal budget. In the first place, the federal share in the total development outlay stands at 73.27 percent of the allocation. This implies that the federal government will continue to exercise a water tight control on the financial allocations according to its own choices.

With the federal and provincial governments from the opposing camp of the Karachi City Government, the likelihood of a commensurate treatment towards allocation of funds shall be most unlikely.

The disbursement of funds are entirely left to the provinces to deal with the situation. As apparent, the CDGK is facing severe problems in maintaining its operational autonomy, let alone the prerogative of policy making.

Some quarters expected to receive at least a token allocation for strengthening the good governance initiatives under the devolution plan. The city is totally marred by a collapsed law and order system, flawed and scarce water supply and sanitation, solid waste maintenance and failing transportation management.

It was expected that some special consideration would be given to the extraordinary sufferings of the city that contributes about 15 per cent of GDP and remains the main hub of banking and stock market. So far nothing has been earmarked to meet the special needs of the metropolis.

For examples, the PSDP has not considered the KESC in 2004-05 for any new allocation. The fact that the distribution network of the power utility is in dire need of re-vamping was not enough to convince the policy makers for an appropriate grant.

The clandestine effort to sell off the KESC is also a point of concern. With the current balance sheet of the country showing Rs15 billion as the expected target from privatisation earnings, it will not be surprising if fresh attempts are made to sell the power utility.

If done, this shall have grave consequences on the city which has more than 60 percent of its population in squatter settlements and informal housing. It goes without saying that these fateless souls shall be placed at the tail end of any improvement in service delivery planning.

It is interesting to note that a hefty Rs80.609 billion are kept for infrastructure projects. In theory, this may be a good signal for the federally supported on-going projects in Karachi including Karachi Northern Bypass, Lyari Expressway and K-111 Bulk Water Supply Project.

However some of the urgently required projects for the city did not rise up to the announcement charts. One of them is the Karachi Circular Railway. It is estimated to be completed in Rs12 billion with an enormous benefit to the commuters, particularly those belonging to lower income groups.

The federal government has perhaps left this as an unattended issue for the CDGK to fend for itself if it wishes. Interestingly the Karachi Mass Transit Programme, which is likely to cost over Rs. 60 billion in its original form, is kept alive.

The Sindh budget only indicates the governments resolve to support it in administrative respects. Allocation of Rs60 million is only a token fund to let the project be saved from the record room dust.

Realistically, it is not likely to take off. Similarly the attempts to develop what could be called as a citizens-promoted Greater Karachi Sewerage Plan did not find a place in the federal PSDP.

Nor was the creation of a master planning institution in the city hierarchy was envisaged. The previously undertaken master planning effort cost nearly half a billion rupees in 1990s. The City needs support to launch a fresh but logical planning attempt on a continuous basis with local funds.

It appears that the builders and developers mafia has struck again! The reduction of 10 per cent Central Excise Duty on construction materials was a step taken in that direction.

It was announced to benefit the lower income groups. The fact of the matter is that the lower income groups do not have accumulated savings to procure the building/construction inputs in one go.

The house building takes place in several events and it is often done through the local building component manufacturer. He normally possesses very basic items certainly not those who shall be affected by the CED reduction.

Needless to say that builders and developers, who were chanting favourable slogans for the ruling junta, have finally won. Their projects shall be able to reap greater profits than expected.

This shall also pose a challenge for those public minded professionals and civil society organizations which have resisted the blatant violations of existing rules and regulations related to building projects.

The much controversial, commercialization of major roads of Karachi is also a contentious issue, which seemingly has bolstered the government's position through the current budget against the civil society concerns.

A major issue pertinent to Karachi is the absence of any stocktaking of the budgetary performance from the previous financial year. All that the provincial and federal budgets provide is the allocation of funds and the factor of increase or decrease in any head.

Whether the funds for the previously approved schemes were available or properly spent remains an unanswered question. The announcements of packages by the President or Prime Minister remain an issue prevaricated by officials.

The Sindh Finance Minister, however, recognized and endorsed these packages and even offered Rs1 billion to supplement such spending. However rightful impacts of these packages are yet to be seen.

The Annual Development Programme (ADP) for Karachi is sized up to Rs1.162 billion in Sindh budget. In comparison to the CDGK's allocation of Rs15.59, this is a paltry allocation. However in comparison to the total amount for the ADP, this is about one fourth of the outlay. Jugglery of figures will take some time to unfold the truths.

The budgets at both the federal and provincial level give one message very clearly that the federal government will continue to exercise a strong iron fisted control on the city's development and management.

Major chunks of the allocation/disbursement shall obviously come from the centre. The CDGK and its subordinates tiers will have to be content with the residual privileges to plan and manage the city.