BALOCHISTAN has historically held the centre wholly responsible for the province’s underdevelopment and economic backwardness. But now the province cannot absolve itself of responsibility, as it has received unprecedented funds under the seventh National Finance Commission (NFC) award and more autonomy after the passage of the 18th Amendment.
What it still lacks, however, is political will.
The 18th Amendment and the NFC award empowered the provinces and altered the flow of funds to them. Balochistan got increased fiscal space and powers to improve its socio-economic condition. It is now largely responsible for the delivery of goods and services and it should be held accountable for its poor performance in this regard.
Under the seventh NFC award, Balochistan’s share in the divisible pool increased to 9.1 per cent from the earlier 5.1 per cent; the province received Rs83bn in 2010-11 compared to Rs29bn in 2009-10. It also won Rs120bn in gas development surcharge arrears outstanding since 1954, to be paid in annual instalments of Rs12bn. The increase in funds from the divisible pool, the retrospective increase in the well-head gas price and the reimbursement of gas arrears helped raise revenue receipts by 95 per cent to Rs116bn in 2010-11.
In addition, the 18th Amendment fulfilled Balochistan’s long-standing demand for provincial autonomy. It devolved 17 ministries and shifted several subjects to the domain of joint decision-making between the provinces and the federation.
But how has Balochistan handled these additional responsibilities? There is still a big question mark against the performance and capacity of the Balochistan government, as there has been no improvement in the delivery of goods and services to the people. With the increased revenue, the provincial government seems to have done little more than purchase a new aeroplane and increase discretionary funds to Rs300m this year for each legislator to spend in his constituency.
Meanwhile, the province’s economic potential remains untapped. For economic planners, it represents a bonanza in the shape of its natural endowments and geostrategic location.
What have the economic managers in Quetta done to tap the huge development potential of key sectors including agriculture, mining and fisheries?
Setting priorities for budgetary allocations for different sectors is the key area where prudence and foresight are needed. For instance, the water-starved province badly needs a mega development plan for water resources as its groundwater table is persistently declining. Similarly, the gas reserves at Sui, the country’s single largest gas-producing field, are falling by five per cent each year and may be exhausted by 2022. Gas revenue is the major source of the province’s income, and discovery of new gas wells should be the top priority of the provincial government, which it does not seem to be.
The province did give higher priority to education in the previous and current years’ budgets. Yet the bulk of the education budget was allocated for the release of salaries for teachers and for building schools to benefit the construction mafia. How many technical training centres and quality educational institutions has the provincial government planned or set up?
The province will remain in the underdevelopment trap until and unless its human resources are developed and its institutional capacity improved.
The province’s own revenue generation is currently estimated at only around Rs5bn, of which only a paltry amount comes from taxes. The government has not yet taken any new measures to broaden the province’s revenue base, which could reduce its dependence on the centre.
It has no money, for example, to bear the financial costs of its legal fight against international miners over the Reko Diq copper and gold deposits. For this it is again looking to the federal government, which has refused to pay the Rs450m fees for legal experts to fight the international arbitration case filed by Tethyan Copper Company. How will the Balochistan government pay damages if the international court rules against it when it is unable to pay even the fees for legal experts?
At the same time, what we have also witnessed in the last two years is an unprecedented increase in the size of the province’s budget. The Rs152bn budgetary outlay for 2010-11 was almost double that of 2009-10. The Rs172bn budget for the current fiscal includes development expenditures of Rs36bn and non-development expenditures of Rs144bn.
But Balochistan’s remote rural areas still appear to be stuck in the Middle Ages, with residents using donkey-run fans in the hot summer in Naseerabad and Dera Murad Jamali, travelling on camels in Jhal Magsi, and burning wood and coal for fire during the chilling cold in the northern areas of the province.
This under-utilisation of the development budget reflects poor fiscal planning and management due to lack of institutional and human capacity. Fiscal and physical targets do not match. The province lacks a strong, efficient and well-coordinated institutional framework for its development.
A key issue is the law and order situation, which is also the responsibility of the provincial government. Had it taken effective measures, the security situation would not have worsened to the level it now is in the province. And it was the failure and inaction of the provincial government that gave the military establishment a chance to interfere in the Balochistan situation.
With its increased fiscal space the province should be able to meet its development needs adequately, but efficient management of resources is badly needed. The government needs to mobilise all its energies to improve the law and order situation and then utilise resources to speed up the industrialisation process in the province in order to cope with its economic problems.
The writer is the author of Economic Development of Balochistan.