With elections just a year away, the PTI has to sell the Khyber Pakhtunkhwa governance model to the rest of country as part of its ‘Naya Pakistan’ model. There has not been much critical evaluation of the budget and economy of the province, and voters need to be informed by independent analysts how the PTI has done in its own province since 2013.
Despite an apparently dynamic leadership of the PTI, KP continues to increase its dependence on federal transfers. Of the total provincial budgetary outlay of Rs603 billion, the province’s own revenue resources are just 7.4 percent (Rs45 billion), which too is a projection since the actual figure has yet to be seen by the end of the fiscal year.
In the outgoing fiscal year, the provincial government could collect only Rs20 billion in ten months against a target of original target of Rs45 billion. Unrealistic revenue targets are used by governments to show a bigger budgetary outlay and announce big budget projects. At the end of the year, people tend to forget the previous year’s budget and the focus shifts to the new budget. This is a time-tested political game that federal and provincial bureaucracies teach to politicians to look big and impressive. One of the reasons for the provincial government being laidback about resource mobilisation is that it receives Rs39 billion in lieu of the one percent of federal tax allocation for the war on terror. But how long will that concession last?
So far the focus of the PTI and its supporters has been on police reforms and new initiatives in the education sector. But a responsible provincial government must address issues of finances as well, by focusing on generating resources of its own. After the 18th Amendment, when GST on services was devolved to the provinces, the PTI-led government has been able to generate enough fresh financial resources. KP badly lags behind in resource mobilisation compared to Sindh and Punjab.
KP’s inflated 34 percent development budget seems higher than that of Punjab and Sindh mainly because it has loans from the Asian Development Bank (Rs52 billion). Other total loans stand at Rs82 billion, which is 39.4 percent of the total development allocation. In the long run, this is unsustainable and seems politically motivated to make the development figures look high.
Though the budget papers claim austerity measures and savings of Rs40 billion (in areas yet to be shared), adding Rs33 billion in a single year just in government employees’ salaries is a huge increase in the non-development expenditure. If this pace is maintained, then the raise the province receives from the federal transfers will be eaten away by non-development sectors. Adding up 104,555 new employees to the government in just four years is a bad policy step. The era of big governments is over.
For years, the PTI criticised the PML-N’s Punjab model of big projects, done at the cost of human development sectors. Now the PTI itself has allocated a large amount for a mega transport project in Peshawar, amounting to Rs50 billion. The government will put all its efforts into completing the project to sustain its political vote bank within the city and in the rest of the province. The PTI cannot afford to lose KP in the next general elections. The incumbency factor could hit the party bad as the ANP’s nationalism has strong historic roots in the province, and could bounce back in the coming elections.
As we have seen in Sindh, when a party based in a smaller province aspires to form government in the centre it often ends up sacrificing its own province’s interests. That is what historically the PPP has done with Sindh. The General Sales Tax is universally a local tax, but the PTI-led government never raised the issue in the Ecnec and NFC meetings. The KP government did not bother much about the lack of the NFC award, which the PML-N government failed to make any progress on.
Following the Sindh and Punjab governments, KP has also started allocating resources on power generation. With the help of the Asian Development Bank and the World Bank, KP plans to generate over 1000 MW of electricity. For political gains, all provinces are in a race to generate power. The location of these power plants will require expensive transmission lines to have connectivity with the grid. Wapda is already spending hundreds of billions on power generation and there is also a lot of interest from the private sector in investing in power generation. One fails to understand then why scarce public resources are being diverted to power generation. Do provinces plan to undo central power planning and Wapda, though legally they have the right to produce power?
Other provinces need to learn from some of the very impressive initiatives taken by the KP government. Key among them is provision of solar energy to schools and hospitals. That would save the electricity bill of the provincial government, reduce burden on the national power grid, and provide uninterrupted power supply to schools and hospitals. USAID has introduced similar solar-powered schools in Sindh and one big hospital in Jacobabad. Renewable, clean and cheap energy should be a priority for all federal and provincial governments.
In literacy, KP is only ahead of Balochistan. The PTI should have pursued a policy of a 100 percent educated KP, but unfortunately, like the Sindh government, their preference too seems to be higher education than primary education. Historically, KP has had the highest ratio of poverty. Budget planning and democratic public policy must address these issues, instead of pursuing popular iconic mega projects which make them look good from a distance.
Email: mush.rajpargmail.com