INCREASED REVENUE FOR BALOCHISTAN IN FY11

SYED FAZL-E-HAIDER
(feedback@pgeconomist.com)
July 05 - 11, 20
10

Balochistan will receive enhanced share in the 7th National Finance Commission (NFC) award in the current fiscal year 2010-11. Under the NFC award, the provinces' share has increased in the divisible pool from existing 47.5 to 56 percent in the first year. Balochistan's share has been increased to 9.09 percent from earlier 5.11 percent. Despite a resource-rich province, its finances have been in bad shape and it ever remained a cash-strapped and hence least developed province.

The province will receive Rs83 billion in the current fiscal year as compared to Rs29.2 billion the province received in the last fiscal year 2009-10. It will receive Rs12 billion in gas arrears in the current fiscal year. It has succeeded in getting Rs120 billion in gas development surcharge (GDS) arrears outstanding since 1954, which would be paid in annual installments of Rs12 billion. The increase in funds from the divisible pool and reimbursement of well-head price and gas arrears have raised revenue receipts by 95 percent to Rs115.53 billion from Rs59 billion.

With more fiscal space, the province will be able to meet its development needs adequately in the current fiscal year, which has commenced from July 1. Efficient management of resources has been an important issue with the province. This time the provincial government has reportedly chalked out a strategy to secure its financial resources through their efficient utilisation for a better return. The government also plans to retire its entire debt burden of Rs10.7 billion- Cash Development Loan (CDL) worth Rs1.7 billion and public debt of Rs9 billion.

The provincial government has announced an increase in development and non-development spending on education, health, vocational training, agriculture, irrigation, clean drinking water, physical infrastructure and other sectors. The government has created the Balochistan Investment Board to attract foreign and local investors in the resource rich province.

With a record outlay of Rs152.017 billion and a deficit of Rs7.10 billion, the province's budget for fiscal year 2010-11 envisages development programme of Rs26.75 billion including Rs3.916 billion of foreign project assistance with current budget of Rs125 billion.

In the budget 2010-11, the provincial government plans to create at least 8,500 new jobs and regularisation of service of 11,500 police and Levies personnel. The new jobs are under the Aghaz-i-Huqooq Balochistan package of the federal government.

The provincial budget proposes spending the highest amount of money in the current fiscal year on general administration - Rs18.5 billion - followed by education Rs17.3 billion and law and order Rs12.5 billion. The major proportion of development expenditure has been reserved for new schemes with a share percentage. It leaves a wide room for the provincial government to fill in the vacuum by evolving a balanced policy to address equitable distribution of resources and developing low priority sectors. An amount of Rs30 million has been allocated for each MPA for their respective development programmes.

The government has increased its spending to Rs12.5 billion on improving law and order situation from Rs5.5 billion allocated in the last fiscal year, as it is peace and stability that will attract the foreign and local investors. More than 100 percent increase in expenses on law and order improvement comes due to the upsurge in violence.

The province plans to improve the education sector, which suffered years of neglect, in the current fiscal year's budget. The government would spend an amount of Rs3 billion for the uplift of education and health sectors during the current fiscal year.

The provincial government has decided to dedicate 5,000 posts provided by the federal government under Balochistan package to the education sector. It has also created nearly 2,000 fresh positions to address the problem of schools with single teachers. It has allocated an amount of one billion rupees for missing facilities in educational institutions. An amount of Rs110 million will be spent on renovation and provision of facilities of girl colleges in the province.

Balochistan faces enormous challenges in the health sector. Shortage of medicines, missing facilities, paucity of resources, ill-trained staff and absenteeism has been adversely affecting the sector. Infant mortality rate in the province is 158 out of 1000 newly born children which are worst in the developing world. The province has increased allocation for providing medicines to the poor from Rs290 million to Rs1.3 billion, Rs1 billion have been allocated for equipment, particularly in the periphery, and Rs100 million for repair and renovation of health institutions.

The provincial government has allocated an amount of Rs100 million for repair and renovation of health institutions in the province. It has upgraded eight civil dispensaries as Basic Health Units (BHU), 14 BHUs have been upgraded as Rural Health Centers (RHC). Under the development program for fiscal year 2010-11, 14 new RHCs and 31 BHUs are being constructed. The cardiac unit in the Sandeman Provincial Hospital Quetta has been made functional. Moreover, the construction on 50 bedded Hospital each at Panjgur, Kalat, Much and Kuchlak is in progress and a 100 bedded hospital is being constructed in Mastung.

The mineral-rich province plans to secure its financial resources by making investments in major oil, gas and mineral exploration companies operating in the province. The provincial government plans to buy all shares of Gwadar Port from its operator- Port of Singapore Authority (PSA)- and the National Logistics Cell in order to secure full control of the strategically located port.

The province plans to take control of its copper and gold assets, worth billions of dollars, from the foreign mining firms. The government has also allocated Rs12 billion for investments in the Saindak and Reko Diq projects and for buying significant shares of the Oil and Gas Development Company Limited.

On the issue of value added tax (VAT), the Balochistan government says that it does not have the infrastructure to collect the VAT on services. Thus the tax should be collected by the federal government and distributed among the provinces through the divisible pool. The development of agriculture, livestock, fisheries and mining can play an important part in alleviating poverty, as over 80 percent of local population depends on these sectors for its livelihood.