Despite being the most underdeveloped province, Balochistan will reduce its development expenditure for fiscal year 2012 by 10% and spend the smallest proportion of its budget on development projects compared to any other province in the country.
Balochistan Finance Minister Mir Asim Kurd unveiled a Rs1,644 billion budget for the fiscal year ending June 30, 2012 on Tuesday, and announced that the province would spend Rs31.2 billion on development, or about 19% of the total and 10% less than the outgoing fiscal year. By contrast, Punjab plans to spend 33% on development, Khyber-Pakhtunkhwa 34%, and Sindh a little over 35%.
The single biggest non-development allocation in the provincial budget is towards education, which is slated to get Rs19.3 billion, or about 11.7% of the total budget, and only 11% (less than inflation) more than last year. Much of the increase comes from allocating more funds for higher education since education became part of the provincial government’s responsibility as a result of the 18th Amendment to the constitution.
Health is expected to get Rs8.8 billion, about 5.3% of the budget. The government has announced its intention to increase salaries for doctors by about 25%.
Law enforcement and public safety has been allocated Rs11.5 billion, which is less than the Rs12.5 billion allocation last year. The decrease comes despite the government’s announced intention of increasing the capabilities of its own civilian police force and paramilitaries to improve the deteriorating law and order situation in the province.
The provincial government has completely abolished its local government system and will allocate no money to sub-provincial governments. During the Musharraf administration, the province used to spend Rs4 billion on local governments.
The overall budget for the province is only 8.2% more than the Rs152 billion outlay for fiscal year 2011, an increase that is almost half the pace of inflation (clocking in currently around 14%). Balochistan appears to lack the fiscal space to increase its budget allocations for development or other necessary expenditures, especially after it was forced by precedent to follow the federal government’s announcements of salary increases of 15% and pension increases of up to 20% for government employees and retirees.
The provincial government then further handicapped its own ability to generate revenues by announcing an expansion in its own workforce of about 6,300. The government will also spend about half a billion rupees on subsidising wheat.
Quetta plans to rely on its own tax collection efforts for less than 3% of its total revenues, with only Rs4.8 billion set as the province’s collection target. The budget deficit is expected to be about Rs6.7 billion, also likely to be financed by the federal government.
The province is slated to receive Rs11 billion extra from the federal government on account of increased income tax collections and sales tax on services, collected on behalf of the province.
However, it must also spend about Rs5.3 billion on debt servicing, which is nearly equal to the provincial budget deficit.
Published in The Express Tribune, June 22nd, 2011.
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