PM Shehbaz reinvents wheel to save Rs1tr

ISLAMABAD: A high-level committee set up by Prime Minister Shehbaz Sharif during his last tenure as PM had recommended a comprehensive set of austerity measures to save up to Rs1 trillion per year in the medium term but most of its recommendations were ignored.

The committee, which was headed by a reputed retired bureaucrat Nasir Mahmood Khosa, had 15 members. The prime minister on Wednesday constituted a seven-member committee to present a practical plan for reduction in government expenditures. Interestingly, most of the seven-member committee members were part of the austerity committee whose most recommendations were ignored earlier.

The newly constituted committee, headed by deputy chairman Planning, includes secretary finance, secretary Cabinet Division, secretary Industries and Production Rashid Mahmood Langrial, Kaiser Bengali, Dr Farrukh Saleem and Muhammad Naveed Iftikhar.

The previous committee, which had presented its report in early 2023 to the then Shehbaz-led PDM government, not only included secretary finance, secretary cabinet, Dr Kaiser Bengali, Dr Farrukh Saleem and Muhammad Naveed Iftikhar but was also far more powerful. This was because besides others, it also included the then minister of state for finance, SAPM on finance, SAPM on government effectiveness, Adviser to PM on establishment and all chief secretaries.

The 2023 committee had recommended comprehensive austerity measures, which as per the committee’s recommendations, if implemented, were to affect the savings of Rs200 billion in subsidies, Rs200 billion from development side, Rs55 billion from running of civil government, Rs60-70 billion via Single Treasury Account, Rs100 billion from conservation measures, Rs174 billion from divestment of non-strategic SOEs and saving from 15% cut of non-combat defence expenditure.

“The committee aims to effect savings of up to Rs1 trillion per year in the medium term,” read the report, which was presented to the prime minister, who implemented it only partially and ignored most of its recommendations. In its conclusion, the committee had noted, “The Committee is of the view that implementation of the recommendations would be a tough task. However, given the fiscal conditions of the country it is imperative that all segments of the society, particularly those paid out of public funds, should contribute to the austerity effort. Many of the recommendations of the Committee can be implemented immediately while others would need to be applied over the medium term.”

The following are the highlights of the last austerity committee’s recommendations:

The Cabinet should consist of maximum thirty (30) members; 15% cut in salary and allowances of legislators (MNAs, Senators & MPAs); 15% cut be applied in current expenditure of all Ministries/Divisions/Attached Departments/Subordinate Offices/Autonomous Bodies/Provincial Government Departments; recurrent budgets be frozen; ban on purchase of new vehicles of all types; reduction in all allowance(s) specific/admissible for a post/organization/cadre by 25%; complete ban on creation of new administrative units (divisions, districts, sub divisions, tehsils) for two years; security protocol of all government functionaries be reviewed and scaled down drastically; complete ban on new recruitments; discretionary grants/secret service fund (admissible to ISI & IB) be frozen; all entitlements regarding foreign travel, postings and visits be reviewed by Finance Division and Cabinet Division in consultation with Foreign Affairs Division; pension reforms being considered by Finance Division be finalized by 30th June 2023; maximum pension (including those of judges of SC and HCs) should be capped at Rs500,000/- per month in all cases; all posts lying vacant for 3 years be abolished; budget allocated to embassies be reduced by 15%; there should be complete ban on import of luxury vehicles, if no ban, it should be subjected to heavy taxation and subsequent wealth tax; no use of SUVs by government officials; all perks of retired civil servants, judicial officers of superior courts and of uniformed services viz vehicles, security, support staff and utilities may be withdrawn; Cabinet Division to identify the agencies/govt. entities performing overlapping functions; Establishment Division, Finance Division and Cabinet Division to rationalize/reduce the number of Ministries/Divisions/Attached departments/Subordinate offices/Autonomous bodies/Authorities in accordance with constitutional mandate; drastic reduction in entertainment budget across the board; foreign travel on obligatory visits only; all subsidies should be targeted only and the focus should only be on the poorest of the poor; provinces should contribute to the subsidies and grants aimed at their residents; in case of BISP and subsidies on electricity for tube wells, fertilizer, etc., major chunk of beneficiaries is from provinces, therefore, contributory/sharing mechanism may be evolved on a gradual basis between federal and provincial governments; wheat subsidy should be targeted, with greater role of private sector; pre-paid metering for electricity and gas be introduced; no new greenfield project should be included in PSDP except for those related to water, energy, climate change and pro poor projects; ongoing/approved development projects may be reviewed and only most important and unavoidable/feasible projects may be processed further for completion; federal government should fund only those development projects which come under its constitutional jurisdiction; the existing system of identification of development projects through public representatives (MNAs, MPAs and Senators) in place since 1985 be done away with; SOEs carrying out commercial activities may be shifted to other arrangements; discontinue subsidies to SOEs which do not provide any public good; non-combat defence budget be cut down by 15%; Single treasury account, on which work has been initiated by Finance Division, be implemented immediately; special accounts be reviewed thoroughly; one day work from home, with only essential staff present in offices, be introduced; day-light saving should be introduced; closure of markets at 8pm across the country; energy efficient electric appliances be used. Only one plot be allowed for civil servants/government servants, judicial officers and uniformed services. More than one plot already allotted as well as additional land allotments be cancelled and put to open auction; progressive property tax be introduced in provinces; units of free electricity allowed to employees of power distribution companies be monetized, etc.