PRO-RURAL DEVELOPMENT SINDH BUDGET

'84PC RESOURCES COME FROM CENTRAL'

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
June 22 - 28, 2009

Fifteen days close to end of this fiscal year government of Sindh presented 327billion rupees budget for fiscal 2009-10 with estimated revenue generation of Rs310 billion. There is an estimated Rs16.8 billion deficit. With 12.7 percent increase over Rs104 billion in the ongoing fiscal year, estimated revenue receipts from divisible pool are Rs125 billion. The province would likely to have Rs204 billion in aggregate from federal government in next fiscal year. Nontax revenue would likely to raise provincial receipts to Rs39 billion, up 29 percent over Rs30.3 billion. In contrast, this fiscal year revised taxes showed 22 percent improvement. Increase in local government grants by 21 percent and ADP to Rs90 billion from Rs67 billion has contributed mainly in widening the revenue and expenditures gap for FY10. The gap can be filled by more than expected receipts and with resource mobilization and curtailing non-development expenditures. Sindh government pinned hopes on sales tax on services to bridge the gap. The budget is rural-development prone with relatively few provincial disbursements for urban development. Rs200 million was allocated for mass transit system and Rs1.02 billion for road projects in Karachi.

Sindh budget is favourable for agriculture sector and focused on human resource development. In collaboration with Competitiveness Support Fund, government established a Sindh Development Fund of Rs2.4 billion to facilitate agro sector. Government would provide 3000 tractors with two to three lacs rupees subsidy in the next fiscal year. The allocation on livestock and fisheries has been revised upward by 36 percent to Rs3.2 billion from Rs2.4 billion.

Sindh fiscal management is highly dependent on federal government. Over 84 percent resources come from the federal government due to over-centralized governance system. While all provinces are agreed on revision of NFC award, the issue is still unresolved. Sindh ruling party also bossing in central government has excused internal insurgency for delayed resolution of NFC issue. How did this insurgency scuttle convention on NFC when it did not budget? The provincial government is of the circumlocutory view that relaxed political stress would lead to 'important ground'. On production bonus funds and sales tax on services, there happened to be indication of fiscal autonomy. Sindh government said it had convinced federal government to transfer retaining power of production bonus funds to the province. The federal government allowed in principal the province to collect sales tax on services. It also wanted the province to bring in to sales tax net other services.

Expenditures on poverty reduction and social protection programmes will continue in the next fiscal year. Cash supports for poverty reduction are basic gaits of the government. For instance, it has enhanced allocations of income support programme to Rs70 billion for the next fiscal year. Besides, Rs4 billion was allocated for Cash Grant Programme especially for women. Along with this, creation of jobs in different existential government departments would add burden to the treasury. Vocational training and microcredit extension would prove a sustainable effort. Government allocated Rs6 billion for education development in upcoming fiscal year. Rs800 million was allocated for infrastructure revamping in industrial zones.

Sindh government raised health development budget by 49 percent to Rs5.23 billion from Rs3.5 billion. There are still 20,000 under treatment hepatitis patients in the province. Rise in health budget will expand the immunization coverage, which is needed, given the low numbers of 0.4 million children and adults immunized thus far across Sindh.

The federal commanded Thar Coal Mining Company was replaced by Sindh navigated Thar Coal Energy Board. The Sindh Chief Minister considered it a major milestone towards exploration and utilization of Thar coals. The World Bank approval of technical assistance of 30 million US dollars for international bidding is a consequential advancement to attract international investment for development of the coalmines. The foreign investors would reduce the components of pubic development funds. This is important to keep deficit gap short. Two billion rupees has been earmarked for infrastructure building in blocks.

Jam Madad Ali, Leader of Opposition in Sindh Assembly termed the budget a 'routine document'. While talking to reporters, he said the budget was prepared without making a prior spadework. He believed so because, according to him, the budget recommended few public relief measures such as rise in pensions and increase in health and education allocations. He was of the view that pension's relief would be beneficial for a small potion of large population reeling under mounting food prices. He questioned why the adoption of national finance commission award was lingered despite that Pakistan People's Party had firm stance over implementation of NFC award on multiple factor basis. To a degree that defined his character as opposition leader who tasted blood, his criticisms were meaningful, but his commiseration on government's position to control deficit with high outlays for health and education sector militated against his pronounced pain for public miseries. Although, the government will find difficulty in reducing budget deficit and may confront with scarcity of funds in the end, his criticism would have saved him from making contradictory remarks if he had advised other low-key sectors for deficit reduction.

Lastly, does it make sense to gain political mileage through rhetoric in the budget speech? Perhaps, it did purposefully for the budget announcer, as he did not miss the chance to boast government's aliveness to target killings or when he lauded coalition partners' support of the government in the budget speech. Keep two jobs separate please. Government has provided in total cash and no-cash supports of Rs170 million for internally displaced persons. It plans to extend Rs200 million next fiscal year.