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June 17, 2016

Decoding Punjab’s budget


June 17, 2016

The presentation of a budget is considered to be one of the fundamental functions of a government. If a government is unable to manage the requisite numbers in a legislature necessary to see the budget through, it has to step down. From being merely a statement of projected revenue and expenditure, the budget has come to be identified as a means for a government to project its detailed policy choices it wants to implement during the next fiscal year.

It is also true that the interest evoked by the budget season has only proven to be transitory by virtue of the generally-held belief that budgets tend to be run-of-the-mill stuff, characterised as they usually are by jugglery of words and followed mostly if not always by what economists describe as many ‘mini budgets’ over the course of the year.

For a more educated lot, budgets are considered to be favourable to big business with very little for social sector development. It has become customary, something of a shibboleth that while a government or those aligned to it term a budget as pro-people, the opposition and its supporters are quick to denounce it as anti-people.

Given this background, it is interesting to review Punjab’s budget. What really struck me in this budget was the pronounced shift of the PML-N government from infrastructure projects to social sector development. A total of Rs168.87 billion was allocated for various social sectors such as education, health, water supply and sanitation, women’s development and social protection; this is 31 percent of the Rs550 billion development budget of FY2016-17. If you couple that with the allocated money on agriculture and law and order, the figure goes up to Rs804 billion, which is 57 percent of the total budget outlay of Rs1681.41 billion.

The school education department happens to be the recipient of Rs56.76 billion, 71 percent more than what was allocated during the current financial year. Together with an allocation of Rs31 billion in terms of ongoing expenditure at the provincial level and Rs169 billion for school education at the district level, a grand total of Rs256 billion has been earmarked for the uplift of school-level education. This is in addition to the allocation of Rs46.87 billion for higher education.

Likewise, the government has planned to expend a total of Rs43.83 billion of the development budget on health facilities, 43 percent more than the current fiscal year’s allocation. The key initiatives announced for the health sector include revamping all DHQs and fifteen major THQs. The idea behind upgrading facilities is to provide state-of-the-art medical facilities to the people at the tehsil and district levels so that they do not have to rush to bigger cities.

For the first time in 25 years, agriculture has registered negative growth; during the current financial year it eroded 0.4 percent from overall GDP growth. This becomes all the more critical if seen in the context of the employment of 40 percent in the farm economy. A slump in global food prices, accompanied by decreasing demand of agricultural exports, may have led to this dire situation. But it did lead to protests and sit-ins by the farmers’ community thereby putting the government on the alert.

The Punjab government has earmarked Rs52.3 billion for the development of the agricultural sector. Coming on the heels of major concessions made for farmers in the federal budget, Punjab’s allocation for agriculture does acknowledge the need to restore the sector to a semblance of normalcy if not growth. The Khadim-e-Punjab Kissan Package represents an overdue effort to address the malaise in the agriculture sector on the part of the Punjab government.

A total of Rs23.30 billion has been set aside for various youth-related projects, which include technical and vocational training and education, provision of laptops and sports facilities, e-libraries and self-employment schemes. The government has planned to impart technical and vocational education to two million youth under the Punjab Skill Strategy by 2018. So far, around 450,000 youths have been equipped with technical training.

An allocation of Rs30 billion for provision of clean drinking water to people is another significant aspect of the budget.

This hike in social sector spending on areas that matter most to the common man represents a welcome departure from what the PML-N has been said to be obsessed with: infrastructure development. The message being sent across is of people being the pivot of the government’s spending priorities. For long, education – particularly school education – has not received the kind of policy attention it so acutely deserves. The kind of education we impart to our young children at the school level will shape their later life.

Thus significant allocations in education, health and technical and vocational training seem to represent an effort to find a way to deal with the youth bulge. The Punjab chief minister has certainly demonstrated his commitment to make this turnaround possible. However, there are some pitfall – like timely releases and effective utilisation of funds – that need to be factored in before any final conclusions.

The fact, however, is that Punjab leads the rest of the provinces in terms of budget utilisation, evidenced by 95 percent utilisation of funds allocated during the current fiscal year.

Though the province has made progress in terms of doubling its tax collection compared to 2012, there is still a long way to go as revenue generation leaves much to be desired. The federal funds transfer exceeding Rs1000 billion means that the province has a lot of catching up to do on the revenue collection front.

On the whole, a careful analysis of the Punjab budget shows that some rethinking has gone into deciding budget priorities. There is a discernible shift towards social sector development, which should be welcomed. As they say, better late than never.

Email: [email protected]

Twitter: #Amanat222


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