Budget's new classification system

One feature of the federal budget is that it was prepared according to a new budgeting and accounting classification system. This new classification system, according to the "2004-2005 Federal Budget In Brief" was approved by the president of Pakistan as an integral part of a new accounting model.

This "more comprehensive" classification system replaces the previous chart of classification that had been in use for the past 15 years, and which was first adopted in the 1979-1980 budget during Gen Zia's regime.

As pointed out in the budget document, the new classification system makes exact correspondence and comparison of data in "certain areas" between the 2004-2005 budget and previous budgets "not feasible".

Two of these areas where comparison is now not feasible appear to be "subsidies" and "grants". A comparative look at the federal budgets in brief of 2004-2005, 2003-2004, 2002-2003 and 2001-2002 shows that the categories of "subsidies" and "grants", which were clearly classified in detail under the chapter of Current Expenditure in the past three budgets in brief, are missing in the 2004-2005 Federal budget in brief.

Similarly, in the '2004-2005 Budget At A Glance', the categories of "subsidies" and "grants" are missing from Current Expenditure, whereas they were clearly listed in the previous three years' 'Budget At A Glance'.

But judging by the finance minister's budget speech, subsidies for 2004-2005 are at least Rs51,000 million: Rs46,000 million for Wapda and KESC, and Rs5,000 million for wheat import.

Despite pressure on the federal government to gradually withdraw all types of subsidies, the latter have generally been on the increase for the past several years: in 2000-2001 it was Rs11,832 million (revised estimate Rs22,706); in 2001-2002 it was Rs20,680 (revised estimate Rs25,500 million); in 2002-2003 it was Rs20,800 (revised estimate Rs49,780 million); and in 2003-2004 it was Rs64,517 million (revised estimate not found in the 2004-2005 Federal Budget In Brief).

Also under the new classification system, debt servicing, which previously was a prominent category under 'Current Expenditure', is now made less prominent and subsumed under a new but broad heading of "General Public Services".

Under the Rs349,516 million expenditure listed under this new heading, debt servicing (servicing of foreign debt, foreign loan repayments and servicing domestic debt), comprise Rs265,329 million, which works out to 29 per cent of the total estimate expenditure of Rs902,770 million.

The 29 per cent figure for 2004-2005 is a continuation of the trend of a steady drop in the amount of debt servicing as a percentage of total (estimate) expenditure over the past four years: 44 per cent in 2000-2001 and in 2001-2002, 39 per cent in 2002-2003 and 32 per cent in 2003-2004. (The finance minister however said in his budget speech that the overall debt servicing had been brought down to 27 per cent of revenues in 2003-2004.)

It may be pertinent to point out here that one of the structural performance criteria of IMF loans is a reduction by law of the consolidated government debt (federal and provincial) to below 60 per cent of GDP in ten years. In his 2004-2005 budget speech, the finance minister said that the overall public debt had been brought down to 85 per cent of GDP in 2003-2004.

He also said that a fiscal responsibility law is being tabled that would limit the extent of borrowing by the government in future. What is interesting is that the revised debt servicing amount for 2003-2004 (Rs317,723 million) is comparatively much higher than the estimated debt servicing amount (Rs256,968 million).

Based on this new revised higher figure, debt servicing actually makes up 37 per cent of the total (revised) expenditure (Rs868,392 million) in 2003-2004, as compared to 32 per cent according to the 2003-2004 budget estimate. This, however, is a good sign if it means that the government is making the necessary pre-payments for early retirement of debt.

Apart from debt servicing, defence spending is another area which registered a considerably higher amount in the revised 2003-2004 figures (Rs180,537 million) as compared to the original estimated figure (Rs160,300 million). This is probably due in large part to the special operations in the Tribal Areas.

Although, development expenditure in 2004-2005 has increased by a record amount of Rs42,000 million over last year (from Rs160,000 million to Rs202,000 million), and development expenditure has generally been on the rise since 2001-2002, so has defence spending increased considerably by Rs33,626 million from last year and defence spending estimates too have been on the increase since 2002-2003.

And in the revised estimates, defence spending and debt servicing have always been much higher than development expenditure, at least since 2000-2001. To give the latest example 2003-2004, revised estimates for defence spending, debt servicing and development expenditure are Rs180,537 million, Rs317,723 million and Rs154,373 million respectively. In 2002-2003, they were Rs160,100 million, Rs257,434 million and Rs131,700 million respectively.

The finance minister had said in his budget speech that the higher revised estimate for gross expenditure in 2003-2004 is entirely due to pre-payment of expensive foreign loans. But a closer look at the 2003-2004 figures show that the difference in the revised and estimated figures for debt servicing plus defence spending (Rs498,260 million minus Rs416,268 million), i.e., Rs81,992 million, is higher than even the difference in the revised and estimated figures for total expenditure (Rs868,392 million minus Rs805,200 million), i.e., Rs63,192 million.

Apart from debt servicing, subsidies and grants, another category which was prominent under current expenditure in previous Budgets At A Glance but missing in the 2004-2005 Budget At A Glance is "pensions". Pensions (and superannuation allowance) is now classified together with debt servicing under "General Public Services" and is estimated at Rs42,533 million for 2004-2005 (more than the Rs37,625 million in the 2003-2004 budget and the Rs40,995 million revised estimates).

The increase in the pension figure between the 2003-2004 revised estimates and the 2004-2005 budget estimate seems small in view of the fact that the finance minister has announced pension increase of 16 and 8 per cent for pensioners who retired before and after 1994 respectively.

As is evident from the new classification system of budget preparation, there now seems to be a conscious effort to downplay subsidies, debt servicing and pensions from 2004-2005 onwards, while focusing attention instead on spending on Economic Affairs, Social and Community Services and Environmental Protection, all of which are now listed as prominent expenditure categories after General Public Services and Defence Services.

Lahore's little Britain

I have been sharing with you passages from Lahore: a Memoir, written by Muhammad Saeed. He worked for The Pakistan Times, once the nation's most powerful newspaper. That, alas, is no longer the case. The paper is nearly dead and the man left us years ago. He was, for reasons still unknown to me, universally known as Maulvi Saeed. He was my teacher at The Pakistan Times or PT as it was popularly known.

The passage I have chosen from A Memoir is titled Gimkhana: Little Britain. It begins:

The Punjab Club and adjacent to it the Governor's House were precincts a "native" could hardly imagine to enter. Facing the Government House was the beautifully laid Lawrence Gardens, with a picturesque cricket ground, two mounds -- in fact a pair of derelict brick kilns of perhaps Mughal days.

Nearby rows of tall English trees lent charm to another British preserve -- to Montgomery Hall, the Gymkhana Club, a symbol of prestige and a favourite haunt of men of diverse talents and fortunes.

Club-addition as a peculiar Anglo-Saxon trait has been beautifully described by a British writer, Dennis Kincaid: "The English in India who had usually sent their children home to England to be educated and had in consequence none of the intense devoted family life of Indians, found the same pleasure in Gymkhanas as so many Americans in country clubs and reunions of regular fellows and good mixers.

Few Indians drink like Anglo-Saxons; and even those few have no particular zest for a bar, for the hours spent perched on a high stool with instep resting on a brass rail. Consequently, the drink profits, on which club finances generally depended, declined.

Sometimes an old Anglo-Indian who had found his periods of leave and visits to England increasingly unsatisfying ("England seems quite a strange country everyone is in such a hurry") would have settled down in the station where he had been happy with the golf-course and the friendly gossip in the bar afterwards, and by virtue of his long connection with the club would have been elected secretary year after year without question, and he would now find the changes almost bewildering.

Such a one said to me, "Before the old club finally has to put up the shutters I hope I'm dead". Whatever the forebodings of this prophet of gloom, we did quite a lot not to allow the shutters to be put up.

I have witnessed in Montgomery Hall an incessant clinking of goblets. At a crowded party (I do not now remember precisely which) I could only find a foothold near the counter glittering with pegs of all sizes and cuts. The Hall was full of wine fumes, lung-vapours, and a confused mass of English, Urdu and Punjabi. Everybody seems to be trying frantically to get inside an alien skin.

In the midst of this riotous festivity, I saw our celebrated poet, Faiz, entering the room. He smiled and asked me: 'What are you doing here, near the counter?' I replied: "I am keeping count of empty bottles". He laughed and was lost in the crowd towards the upper reaches of the Hall.

In the meantime, an elderly, burly woman came rolling down and dumping her glass of lemonade on the counter, picked up a whisky peg and said: "It is foolish to be content with soda when whisky is available!" What an act of high connoisseurship! Though there were no 'thundering drinks' and the 'blacking of the Corporal's eye', the atmosphere was as gay and boisterous as when subalterns returned from remote outposts. (In a shattered dream, in 1965, the Indian Commander-in-Chief could think of no other place for conferring grandiosity on his 'victory over Lahore' than by announcing that he would have his evening 'bara' peg in the Gymkhana!)

It is not only human beings that have been on the move in history; trees, too, have travelled with them. Abdur Rahman-I carried the date-tree to Spain; the Mughals brought trans-Oxus trees and flowers to this sub-continent; from the British Isles came tall, majestic trees that now adorn the Lawrence Gardens.

Its cricket ground nestling cosily among tall, exotic trees and shrubbery is a piece of land that vies in beauty and elegance with the finest in Kent.

The Hall in fact comprises two buildings -- the Lawrence Hall and the Montgomery Hall -- built in different times in memory of two Punjab Governors, Sir John Lawrence and Sir Robert Montgomery. The two structures were integrated into one.

Lawrence's name was attached to the Garden and Montgomery's to the Hall. The complex had huge halls where meetings and shows were held -- but mostly it was a meeting place for the foreign elite to while away their evenings in summer with iced drinks and in winter with a log-fire. A place to gossip where the youngsters caricatured their superiors and the elders speculated upon the fate of the Empire.

(Its conversion into a library is a very commendable act. It has been tastefully remodelled and decorated, designed to hold ultimately, not less than 100,000 books. At present, it is almost half-filled. On December 25, 1984 - the 107th birthday of the Quaid-i-Azam, it was declared open and dedicated to his memory).

Like clubs, pig-sticking and hunting were part of British life in India. One could see early in the morning large packs of hounds swirling around hunting parties, bouncing and bobbing, sniffing, and barking. The mere sight of them -- 'transplanted direct from the English sporting scenes' -- convinced one of the 'marvellous days' the British were having in India.

Some local feudals, too, joined the hunt. But traditionally their kennels contained the thin, lean greyhounds that chased rabbits (more than foxes and jackals) bouncing over ditches and burrowing into bushes.

In urban localities, particularly on The Mall, people noticed with amusement, and not without a tinge of pain, dogs accompanying their masters in motor-cars, lolling out their tongues and flying past the 'natives'. Dogs in luxury have often been the envy of the neglected.

A story is told of Sultan Masud who was a great lover of Lahore and hunting. He had a large kennel and prepared for his hounds brocade jackets and golden anklets. Contrasted with this prodigality, was the scant attention he paid to his physician, Aminuddaula bin Talmiz. When the royal superciliousness became difficult to endure, the old physician decided to vent his spleen upon the Sultan in the form of a quadruplet:

"The one who dresses his dog in gold cloth and thinks that to me my skin is enough, is the one who regards his dog better than me. But to me his dog is better than him". In post-war years, a British journalist is reported to have remarked that 'if Hitler had treated dogs as he had the Jews, the British people would have clamoured for war two years earlier.'

The British devotion to dogs has been a source of irritation even for minds which are not easily ruffled. It is said to Schopenhauer that during his years of comparative affluence and fame he used to dine at English Hof.

Every evening he would place a gold coin on the table and when the meal was over he would pick it up and slip it back into his pocket and walk away. An indignant waiter one day could not help asking the old philosopher the meaning of this fantastic ritual.

Schopenhauer looked into the eyes of the waitor and said: 'Dear boy, I have a silent wager to drop this coin into the poor-box on the first day the English officers dinning here should talk of anything else than horses, women or dogs."

(To be Continued)

Feudalism to capitalism, via communism

The Indian government plans to give loans to farmers as part of its poverty alleviation measures. It will get state-run banks to bring five million needy farmers into their network by providing supposedly easy loans.

To my mind this is an absurd way to help anyone in distress. If you have watched Mother India, the 1950s masterpiece of a movie about the trials and tribulations of rural folk, you would remember the debt trap in which Sukhi Lala, the manipulative moneylender, held them.

Ostensibly one of the objectives of the proposed credit policy of Prime Minister Manmohan Singh's government is to ease the pain of debt-ridden farmers, many of whom commit suicide because after a failed harvest they are unable to repay the Sukhi Lalas who run the country's usurious parallel credit system.

The new credit policy is not likely to change matters for the small farmer even if the banks will not be charging the usurious rates that moneylenders do. One striking memory of India's continuing flirtations with similar populist measures for me is Laddan Mian, once among the richest landlords in Mustafabad.

Mustafabad lies in the mainly agrarian district of Rae Bareli in Uttar Pradesh that later became Indira Gandhi's preferred parliamentary constituency. A mismatch between his lofty intellectual trajectory and his less inspiring though immense wealth prompted Laddan Mian to hand out all the vast farmlands he owned to his hangers-on.

Among the beneficiaries was the village moneylender, who continued to lavish Laddan Mian's feudal mansion with quality provisions, including canisters of the purest 'desi ghee'.

When Laddan Mian's younger brother, a professor of Urdu and Persian in Rampur, protested about the squandering of the family's fortunes, Laddan Mian remarked famously: 'Jab Saltanate Roma Na Rahi, To Hamari Kya Haqeeqat Hai?' (If the great Roman Empire dissipated without trace, what chance do we stand against the vagaries of time?)

Anyhow, once all the land was gone, the moneylender too disappeared from Laddan Mian's life. Other hangers-on also vanished, leaving him to fend for himself and his ageing wife and two unmarried daughters. It was probably around the 1967 elections when Indira Gandhi announced easy loans to farmers, the kind the present government is again contemplating.

Based on some bad advice and prompted by a real need to feed his family, Laddan Mian took a loan of Rs 300, ostensibly to raise cattle. The money lasted him but a few weeks. When the bank started enquiries about his non-existent cattle, Laddan Mian fled to Lucknow where he died in penury.

The legion of Indian farmers, however, are not Laddan Mians but dirt poor men who struggle to raise a crop on their tiny bits of land with little help from the official credit machinery. They are in hock with moneylenders for everything from seeds to fertilizers and farm implements.

Their ability to repay loans though is suspect given their dependence on the monsoon and the vagaries of the market. Is Dr Manmohan Singh, the famous economic reformer of yore, falling prey to populism? Is he preparing the ground for the Congress Party to consolidate its vote bank among the poor in the event of an early election? It could be argued that state largesse to the poor would not hurt the economy too much since it would be only a fraction of the bad loans that previous governments have incurred by giving unsecured loans to the corporate sector.

In fact, that is the kind of rhetoric one is used to hearing from the communists. But here is a twist of irony. It appears the Left parties are being made scapegoats for a policy of populism that the Congress needs for its own political agenda more than anyone else? It was in fact quite amusing to read the views of the leading communist apparatchiks of West Bengal who are clearly tired of being cast in the wrong light.

The CPM government, according to a report in the Business world magazine, are actually feeling uneasy with all the populism that is being unleashed by the Delhi government.

"We are not building communism in West Bengal," says Nirupam Sen, West Bengal's Marxist minister for commerce and industries. "Neither are we building socialism. We are building capitalism, I can tell you that." The magazine also has the state's chief minister Buddhadeb Bhattacharjee agreeing with his minister and quoting Deng Xiaopeng to prove his point.

Even as the CPM's politburo members in Delhi strongly protest moves to privatize public sector industry, in the Marxist-ruled West Bengal workers have been laid off, unviable public sector units have either been closed or put up for divestment, foreign firms have been encouraged to set up base, and unions asked to shut up, says the report.

Reconciling the ideals of Marx and Lenin with those of a free market is something Kolkata's communists do with practised ease these days. "Communists are realists," says Sen. "If I am to say no to private investment and say that only the government will invest, where will I get the money?" Or, as Bhattacharjee declares famously, "Marxists are not fools".

Indian Marxists, like Laddan Mian of Mustafabad, are imbued with a strong sense of history. So what if one refers to the fall of the Roman Empire and the other to the ill-fated Soviet Union to illustrate their respective assertions. Essentially, both aremere footnotes in history.

* * * * *

In Kolokota, the City of Joy, a bizarre story is taking shape. According to a report in the Indian Express, on June 25, Nata Mallick, West Bengal's veteran hangman, will watch his grandson Prabhat place the noose around a man's neck for the first time. At that moment, the world will crumble around Bangshidhar and Belarani Chatterjee, parents of Dhananjoy, the man who will be hanged for raping and murdering a young girl on March 5, 1990.

With eight days to go, Mallick is busy teaching his grandson the twists of the trade. On the other side, all appeals for pardon turned down, Dhananjoy's parents are desperately hoping that the courts will hear their final plea: "Hang him after we die."

Lalooji's ban

Laloo Prasad Yadav has been the subject of many sitcoms. But a friend who saw a drain choked with plastic bags was reminded of a wise step Mr Yadav has reportedly taken in India as railways minister.

He has banned the use of plastic cups in trains. Apparently, this measure is aimed at promoting earthenware pots. Mr Yadav's argument is that the step would create employment opportunities for millions of potters across India whose livelihood has been threatened by the increasing use of plastic in everyday life.

An information officer of the Indian Railways recently told newsmen that the earthenware cups cost 10 paisas apiece compared to Re1 for each plastic cup. He also said the earthenware cups could be easily disposed of and that if they were thrown out of the trains, they broke into pieces and melted into the soil - "the best way to protect the environment." Plastic cups are non-degradable. The friend insists that our "graduate" leaders should take a leaf out of Lalooji's book.

These litter-louts

The other day someone went to the Aga Khan Hospital to see a convalescing relative and since there was still 10 minutes to go for the visiting hour to start, he decided to wait on one of the benches in the open quadrangle.

Even though the management has placed many garbage bins, he was surprised that smokers were flinging away cigarette butts and men and women throwing empty wrappers on the floor.

The visitor advised a man, sharing the bench with him, not to throw the wrapper of his paan on the floor, to which the paan-eater replied "Look there is a sweeper cleaning the floor. It's his job to pick up the litter." This was a strange answer but it reflected our national characteristic of passing the buck.

But what a colleague says is quite heart-warming. He is one of those who go out of their way to try to reform people. While driving on the streets of Karachi, if he sees anybody throwing out fruit skins or pieces of paper or cigarette butts from the car, he draws up next to the litter-lout at the next traffic signal and says politely "Look, my friend, if we won't keep our city clean, who will? Please don't throw anything on the streets."

He says that in all these years there has been not a single person who answered back. Most people said "Sorry," and those who didn't certainly looked remorseful.

It is for schools to teach the children not to spread litter. Teachers who create this kind of awareness will be doing a service to the country because the converted children will stop their parents from throwing the garbage on the streets.

Our TV channels can also do a lot to inculcate this habit among viewers. They can intersperse their popular programmes with short commercials against litter-bugging. Newspapers too can play an effective role through advertisements on the subject.

Even if they only communicate with the educated, it would be a good idea to start with them.

Fear grips the homeless

On his way home at night, a colleague noticed that following the recent spate of terrorists acts in Karachi, the homeless have disappeared from pavements. Previously, the pavements along M.A. Jinnah Road - from Merewether Tower to the Quaid's mausoleum - used to be occupied by shelterless souls stretching out in the open. Not any more.

Karachi may be used to experiencing long spells of violence, but the current one is getting a little too protracted. The homeless, whom even police officials do not bother, have moved to side lanes where they can sleep without being awakened by terrorists or dacoits on the loose, firing off their guns.

Unusual graduation ceremony

It was an interesting graduation ceremony and quite different in many ways. As a number of young mothers walked on to the stage to receive their diploma from the chief guest, Feroze Qaiser, one-time economic adviser to the president of Pakistan, tiny tots dressed in their Sunday best tagged along as they beamed proudly at Mama's achievements.

This was the Montessori Teacher's Training Centre, the only one in Pakistan which is recognized by the Association Montessori International (Amsterdam), putting on its annual public appearance at the end of the 36th course.

Although a prestigious institution, the MTTC prefers to work quietly and keeps away from the blaze of publicity. A band of devoted teachers have kept the legendary Ms Gool Minwalla's legacy alive. A student with a Montessori diploma from here gains automatic recognition all over the world where the system devised by Maria Montessori is in vogue.

Nearly 68 students graduated this year - all of them women, of all ages and many of them married with children. All of them had a word of gratitude for their teachers and their families.

Given the hard work they are required to put in for 10 months, the young mothers could never have made it without baby-sitting support from their mothers and mothers-in-law and the understanding shown by their husbands.

What did they gain in the end? As the MTTC director, Farida Akbar, pointed out, they had learnt about "the love of life and the love of the child as the most magnificent expression of life on earth". Only if everyone were to be put through this course, there should be more peace in the city.

Besides, it also perhaps makes the women who undergo training there better mothers. Sakina, one of the participants, said that her baby (Sehr) was eight months old when she was admitted to the course. Now Sakina says she understands Sehr better.

Noisy rickshaws

Should rickshaws be allowed into the premises of the National Institute of Cardiovascular Diseases? Many feel that these three-wheelers create quite racket - matched only by the whistle-blowing guards of the health centre - and disturb patients.

Rickshaws are stopped about 10 yards inside the main gate of the NICVD. Two security guards are on duty there. They stop rickshaws by blowing whistles and gesturing animatedly to them to proceed no further.

But the spot where rickshaws are stopped is no more than 50 yards from the OPD entrance. One can hear them even in the main building, and one can imagine how the patients must feel.

One observer said he counted 37 rickshaws and all of them had faulty silencers during a stay of little more than an hour. But stopping rickshaws altogether from going into the premises would mean a longer walk for cardiac patients, and that too can be a problem.

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