Wednesday July 06, 2022

KP budget: broken promises

June 28, 2016

It is not uncommon for the home district of a province’s chief executive to get special development benefits. But allocating Rs5.1 billion of the total development outlay of Rs161 billion for Chief Minister Pervez Khattak’s hometown of Nowshera is beyond generous.

In fact, it borders on the outrageous as it is more than the cumulative amount of Rs4.47 billion given to seven chronically poor southern districts: Bannu, D I Khan, Hangu, Karak, Kohat, Lakki Marwat and Tank. Funds for Nowshera even outweigh the total amount provided for six districts of the Hazara region, including the disaster-affected districts of Kohistan and Battagram.

Resource distribution within the southern and Hazara regions also dodges fairness. D I Khan in the southern belt with an estimated population of 850,000 has Rs1.62 billion while Tank with about 240,000 has a paltry sum of Rs10 million. In Hazara, Haripur has the largest share – Rs2.17 billion – while Kohistan has just Rs0.17 billion and Battagram even less – Rs0.08 billion.

The motivations for such inequity-inducing public finance decisions are a mystery. They mock stated commitments to equitable opportunities, fair distribution of resources, and equal rights, emblazoned on Khyber Pakhtunkhwa’s budget documents. They also strongly justify calls for drawing up an equation, like the NFC Award, that spells out the criteria for allocating public monies from the province to districts.

Applying the NFC criteria of population (82 percent), poverty (10.3 percent), revenue capacity (5 percent) and area (2.7 percent) to Khyber Pakhtunkhwa’s districts puts the spotlight on the difference between ad-hoc and evidence-based funds distribution.

If an NFC-type equation is used in Khyber Pakhtunkhwa, its southern districts would get 21 percent of the total development budget. In absolute terms this means that instead of Rs4.47 billion or 2.78 percent of total development funds, this region would get Rs33.81 billion. Simply put, this poor region would get about nine times more funds than it is allocated – bringing nine-fold greater opportunities for improving the lives of its impoverished people.

Evidence-based sharing of public monies is only possible if a fair equation for its distribution is drawn up, on the lines of the NFC. An opportunity to do so was missed by the Provincial Finance Commission constituted under the Khyber Pakhtunkhwa Local Government Act 2013. It has failed to fulfil its mandate of devising an equation for funds distribution. But even if it tries to play its role, its restricted membership will likely deny broad-based acceptance of any equation it suggests.

Addressing this problem is simple enough. The PFC’s membership can easily be expanded by including elected nazims from each of the province’s 24 districts where local governments are in place. This would idiomatically kill two birds with one stone. Elected nazims would be drawn into public finance decisions and their frustrations may somewhat reduce with the restrictions placed on the authorities they were promised.

Such an olive branch may be urgently needed as it becomes evident that Khyber Pakhtunkhwa’s budget 2016-17 fails to meet the “not less than 30%” threshold for fiscal decentralization included in the province’s local government law. The current budget includes Rs33.9 billion and Rs9.4 billion for local government. Combined these account for 26.9 percent, falling short of the minimum 30 percent of total development outlay of Rs161 billion promised to elected local governments.

Khyber Pakhtunkhwa’s budget also evades transparency, relentlessly championed by the PTI in the backdrop of the Panama Papers. A staggering 73.56 percent of Khyber Pakhtunkhwa’s total development budget is placed as “block” funds, compromising transparency and giving politicians and bureaucrats unlimited powers to shift amounts around within the purpose stated for the block. The current 73.56 percent is even greater than the preceding year’s 71 percent block funds. The general theme of this rising trend appears to be: transparency for thee, but not for me.

Another familiar strain seems to be that accountability is more easily demanded than practised. In March 2016, the Khyber Pakhtunkhwa government prominently advertised its decision to spend Rs8 billion on reconstructing 760 schools destroyed by the 2005 earthquake. But it has failed to put money where its intentions are. The total cost of reconstructing the 760 schools remains unmoved at Rs3.7 billion allocated in 2014-15. The additional Rs4.3 billion publicly promised has not been included in the province’s budget.

Moreover, the urgency passionately expressed in public statements contrasts sharply with the glacial pace of rehabilitation. In the past two years, the provincial government has only expended Rs174.57 million or just 4.7 percent of funds for the 760 schools. The government’s broken promises are forcing hundreds of thousands of school-going children – survivors of the devastating 2005 earthquake – to study in makeshift schools.

Instead of augmenting resources and expediting the reconstruction of public schools destroyed by earthquakes, floods or militancy, the provincial government has inexplicably allocated Rs300 million for “constructing and rehabilitating” the Darul Uloom Haqqania in Akora Khattak. The use of taxpayers’ monies for a madressah with known links with extremist groups defies both logic and the National Action Plan (NAP).

Also lies buried in the graveyard of good intentions is the promise to upgrade Abbottabad’s DHQ, providing healthcare to people across Hazara. The outgoing ANP government in 2012 approved a PC-1 upgrade it at a total cost of Rs200 million with a project completion date of 2016. After the 2013 elections, the PTI government not only committed to the upgrading, but went an extra mile by pledging its completion on a war-footing.

Three years later, allocations of Rs5 million, Rs20 million and Rs30 million have been made and even a fresh PC-1 approved. But there has been no work yet on the ground and each successive allocation has remained unused. The final nail in the coffin is an embarrassing Rs1,000 allocated for this project in the budget for FY2016-17 – a clear indication that the provincial government is likely to break another promise.

The writer is the executive director of the Omar Asghar Khan Foundation. Email: