June 16 - 22, 2008

Balochistan plans to include about 870 development schemes (226 of which would be completed in the current financial year) in the Public Sector Development Programme for the fiscal year 2008-09. Former provincial government was unable to complete work on its projects because of lack of funds. What has been affecting the provincial Annual Development Programme (ADP) for the last three years?

While the volume of provincial PSDP has witnessed an increase over the last five years, it has been lower than the development budgets of other provinces. It is a fact that size of development budget has been like "zeera in camel's mouth for the province that is 44 percent of the country with respect to its area. In the past the volume of provincial PSDP used to be only Rs.200 million, insufficient for constructing 30km long metalled road, but in recent years its volume has increased manifolds. The budget for Balochistan was less than Rs 1 billion in 1985 and afterwards it was between Rs 1 billion and Rs 5 billion.

An amount of Rs13.47 billion had been allocated for the outgoing year's ADP, which included Rs3.332 billion for foreign-assisted projects. The programme was by and large unfunded because only Rs3.332 billion were expected in foreign assistance, Rs11.50 million in Japanese cash grant and Rs107.62 million in ASPL-11. Former provincial government had decided to implement the ongoing development schemes and no new project had been included in the outgoing year's PSDP. Similarly, no new scheme had been included in the Rs10.81 billion ADP for 2006-07 for which the provincial government had allocated Rs6.35 billion and Rs3.760 billion were expected from the foreign assistance. The provincial government also carried an unimplemented development budget of Rs9 billion from the 2005-06. During the last financial year, 1071 development schemes were to be implemented under the PSDP.

The reduction in the province's gas revenue, particularly the Gas Development Surcharge (GDS) for the FY 2006-07 had adversely affected the ADP for the FY 2006-07. The total revenue for the province should be around Rs14.647 billion keeping in view the well-head prices of the three wells - Sui, Pir Koh and Loti in Bugti tribal area. According to the last year's estimate, the GDS revenue payable by the Sui Northern Gas Pipeline Limited (SNGPL) from Sui (on the basis of well-head prices) alone was around Rs11.6 billion and from Loti and Pir Koh gas fields, it was about Rs1.334 billion, a total of Rs12.927 billion. However, the revenue supposed to be paid to the government of Balochistan from the Sui Southern Gas Company Limited from Sui wells was around Rs1.72 billion. Ironically, while the federal government has been arbitrarily subsidizing the sale of natural gas from Balochistan to consumers in other provinces without, the province has ever been left with no funds to finance its annual development program.

For the last five years, the federal government has been implementing development projects, which include Gwadar port, Rs5.811 billion Mirani dam, Rs1.1 billion Sabakzai dam, Rs31 billion Kachhi Canal, Rs6 billion water courses project, Rs54 billion roads link project, Rs6.428 billion Naulang and Bolan dams, Rs2.016 billion flood water saving project, Rs2.243 billion Pat Feeder canal, Rs288 million flood protection project, Rs37.37 million rainwater harvesting and desertification control project.

Being the least developed province of the country, Balochistan needs handsome allocations for its development in every fiscal year. Balochistan Poverty Reduction Strategy Paper (BPRSP) was formulated to expedite human development and reduce income poverty. The key pillars of BPRSP are engendering growth, managing scarce water resources, reforming governance, improving human development, and addressing vulnerability to shocks. BPRSP states that the provincial government is determined to pursue a robust economic and human development path. However, it has limited resources and flexibility to support its development needs. Poverty in the province is a consequence of several factors, including geography and low human capital. Many of these factors increase the cost of providing social services in Balochistan.

Human development indicators in Balochistan are the weakest among the four provinces and improvements will need concerted efforts over the long term. There is a dire need to focus on improvement and formation of human capital for Balochistan to tap internal and external markets, and capitalize on market-driven economic growth. Governance reforms in the province need to be implemented and the institutions in the social sector be strengthened to improve the effectiveness of public and private social service delivery. For instance, there is need to localize the planning and management of social services in Balochistan. The centralized planning and management of social services has made public social services less effective and efficient and, and more inaccessible to the poor living in remote areas of the province. This centralization has created undisciplined, unionized, and absentee government providers; a lack of focus on clients' needs; central bureaucracies overwhelmed by transfers and service litigation; and communities indifferent to social service delivery.

Budgetary policy has an impact on each and every aspect of economic activity and development. Provincial government should find new and dependable sources of income to reduce its dependence on federal divisible pool for meeting its financial needs. It is necessary for the province to widen its revenue base by encouraging direct foreign investment and seeking international economic aid agenciesí and multilateral institution's support for the socio-economic development of the province, with the cooperation of the federal government. The provincial government should try to bridge the resource gap through austerity measures, local resource generation and federal grants. The incidents of terrorism and subversion and cash strapped resources further burdened the province's fragile financial resources.

Federal government must also take a series of measures to show its sensitiveness to the development needs and demands of the Balochistan. The province has tremendous mineral potential and wider scope of agriculture development and its water resources, strategic location of immense geopolitical importance, its sea-resources and the colossal potential in all economic sectors should efficiently be tapped. The province can emerge as new economic frontier of Pakistan and the country's prosperity is linked with the development of this strategically located province.