Friday June 02, 2023

The PPP’s last budget

April 26, 2018

The PPP is going to complete its five-year term on May 31. The Sindh government’s mandate doesn’t permit it to present a budget for the next fiscal year. But politicians are shrewd and know how to earn more votes before the elections.

As a result, the Sindh government is going to present its 11th budget in the Sindh Assembly on May 5. It is important to review what the provincial government has achieved with the financial resources at its disposal. We must discern what the government’s priorities are in terms of development spending and under what economic logic they have been reached.

After completing five years in office, has the PPP been able to transform Sindh’s economy; address its infrastructural deficits; and change the province’s social development indicators? Has Sindh become a better place?

The reality is that Sindh presents a gloomy picture with respect to the literacy rate (which stands at less than 20 percent among girls in rural areas); health service delivery (around 20 percent of people suffer from Hepatitis B and C in the province); and the ever-increasing poverty levels (60 percent of Sindh’s people live below the poverty line).

It appears that budget plans and estimates are of little importance as budget speeches are based on promises rather than government’s economic performance during the outgoing fiscal year. The PPP should be judged for what it has accomplished over the past five years.

A budget that is issued before an election tends to make big promises. Attempts are made to do everything that a government ignored during the previous five years. For example, a bill has recently been passed to set up six more universities in Sindh. The government has, once again, ignored the southern parts of the province, such as Mirpurkhas. The upper part of Sindh still remains a priority for public investment in education.

Instead of focusing on its new promises, let’s remind the government about what the people were promised and what has been delivered to them. We must remember that a budget document is not just a statement of intentions. It is a legal bill that is passed by parliament and governments are bound to implement it. In 2013 – the first year of the PPP’s current tenure – the party promised that “during the next financial year 2013-14, an amount of Rs1 billion will be used… [to ensure] housing for the poor in Sindh. Also, [the] Sindh government has taken an initiative to provide 50,000 plots of 80 and 120 [square yards] to [the] poorest of the poor in major urban centres of Sindh”.

We should ask the government where these plots for “the poorest of the poor” are? Over the years, all we have witnessed are large housing schemes set up on land offered at discounted rates to profit-seeking real estate empires.

Sindh’s financial kitty is expanding on two accounts. First, the province is the recipient of one of the largest and ever-increasing share from the royalty over natural resources – mainly on oil and gas. This is because Sindh has become Pakistan’s energy hub over the decades and is the largest contributor in this respect. Second, with the decision to transfer the collection of general sales tax on services to the provinces, Sindh has done a commendable job by increasing revenue. From a meagre Rs7.1 billion collected in 2009-2010, it has witnessed a 150 percent increase in revenue in 2010-2011 after the Sindh government established the Sindh Board of Revenue (SRB) and collected Rs23.9 billion. In 2017-2018, it set a target of collecting revenue worth Rs100 billion.

An increase in resource availability is reflected in allocations made towards to the education sector during the PPP’s second tenure. During its first year in office, the PPP government initiated an education budget that crossed Rs100 billion. In 2013, it allocated Rs102 billion for education and this amount has now risen to Rs185 billion.

Five years ago, it continued to ensure that development was its top priority. Rs185 billion had been allocated for development programmes. Five years later, the government plans to allocate Rs240 billion for the provincial annual development plan (ADP). Despite its tall claims of focusing on development programmes, the PPP has been able to add only Rs55 billion in the development budget.

We must bear in mind that Rs240 billion is merely an estimate. This amount could be slashed by the new government. Development spending priorities could change as well. Last year, Rs 244 billion were allocated in this regard. However, if we wait for the revised estimates, an entirely different figure will emerge.

After the 7th NFC Award, Sindh’s own resource mobilisation covered around 23 percent of the provincial budget whereas 77 percent of the budget is still came from federal transfers in 2014. Last year, Sindh was able to generate 31 percent of financial resources from its own resources and dependence on the federal government was reduced from 77 percent to 69 percent over the past five years. This year’s target of revenue collection stood at Rs2 billion, which reflects a significant improvement in the province’s finances.

Unfortunately, there has not been a single year over the PPP’s five-year tenure when the government has been able to spent the allocated development budget. This has mostly been attributed to a shortfall in federal transfers. The question that we must ask the PPP leadership is: how much of a shortfall could there possibly be in federal transfers? Not more than 20 percent. And yet, the Sindh government has been able to spend less than 65 percent of its development budget.

Fazalullah Qureshi, a former top bureaucrat and a leading economist on Sindh, estimates that Rs500 billion out of a development budget of Rs1.5 trillion has actually been spent over the years. Meanwhile, over a trillion rupees have gone into the pockets of politicians and collaborators in the bureaucracy. This is a dangerous perception that the PPP’s rule has left even in the hearts and minds of educated people.

There is no doubt that roads have improved in the province, Thar can potentially change the energy profile of the country. But will people in Sindh, the PPP’s stronghold, benefit from this initiative? This cannot be said with certainty because energy supply is determined by the federal government. Power supply generated through the Thar coal power project will go into the national grid. Although the federal government has claimed that 12,000 MW have been added into the grid, loadshedding continues to plague households across Sindh and adds to the problems created by unemployment, poverty and backwardness.

The PPP’s rule in Sindh is marked with underperformance and reflects a lost opportunity. It has generated deeper discontent because Sindh has remained the same.


Twitter @mushrajpar