Budgets in Punjab and Sindh

Several features presented in the 2011-12 budget seem to be populist in nature.

Editorial June 11, 2011

The controversy over whether a Christian member of the provincial assembly would be able to present Punjab’s provincial budget thankfully passed with good sense finally prevailing. On June 10, a budget with an outlay of Rs654 billion was presented by Punjab Finance Minister Kamran Michael. Several features presented in the 2011-12 budget seem to be populist in nature, in particular schemes regarding the establishment of so-called ‘danish’ schools in 15 districts of the province, mobile hospitals and the re-introduction of the yellow cab scheme. The figures table before the provincial assembly indicate an external debt amount of over four trillion rupees and the planned subsidies for 2011-12 will perhaps increase this amount, despite the fact that the chief minister has said that he plans to refuse any foreign aid for the province henceforth. An allocation of five billion rupees to provide free medicines at government hospitals is well-intentioned but we hope that it will not be squandered given that most such facilities usually ask patients to pay for any medicine, with the subsidised ones making their way to the open market, thanks to corrupt hospital staff. Similarly, the police have been given a hefty Rs50 billion but the force remains among the most corrupt and ill-trained of any government department, so again one cannot say that it is money well-spent.

As for Sindh, whose budget was also presented the same day by Sindh Finance Minister Murad Ali Shah, the aftermath of the 2010 floods has taken centre-stage. In announcing a budget for 2011-12 of Rs457.5 billion, the minister said that taking care of flood victims would be among the government’s top priorities. Again, well-intentioned words but the fact of the matter is that there is not much to show on this matter during the fiscal year that is about to end. Perhaps, a comprehensive survey needs to be conducted to ascertain the efficacy of government spending on rehabilitation of flood victims so far, so that any gaps and/or neglected areas can be given prompt attention. The issue of who will collect the sales tax is an important one. Ideally, it should be the provinces, because it allows them greater fiscal autonomy. One hopes that the centre will agree to Sindh’s request in this regard.

Published in The Express Tribune, June 12th, 2011.


Meekal Ahmed | 10 years ago | Reply This Editorial misses an essential point of macroeconomic relevance. What is the deficit being projected? Or is there a surplus? The federal budget assumes a surplus of Rs 125 billion from the provinces in the aggregate. Have we, or are we, going to reach that figure? Or are we not? If yes, wonderful. If not, the entire macro-framework will unravel, just like last year. That would not be fiscal devolution in action. That would be a fiscal debacle and disaster.
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