Provincial budgets 2012: Balochistan asks for greater share of federal pie

Province has more revenues, but still wants more of Islamabad’s development funds.

QUETTA:

The 7th National Finance Commission award and the 18th Amendment to the constitution have been a mixed bag for Balochistan: while the province is expected to get substantially more revenues from the federal government for fiscal year 2012, the province is also likely to see several of its key infrastructure projects ignored when assigning funds from the federal development budget.

The Balochistan government is expected to get Rs26 billion, or 24.2%, more from the federal government in 2012 compared to the outgoing fiscal year, significantly above the pace of inflation and economic growth combined.

Many of the increases come from increased transfers by the federal government on income and sales taxes collected in the province, which combined account for Rs11 billion of the additional transfers.

Yet while the overall revenue numbers for Balochistan have continued to rise substantially, the province continues to see the federal government renege on promises to build infrastructure projects utilising funds from the federal development budget or even external sources.

One example cited by observers is the Vindar Dam project in Lasbela district, which President Asif Ali Zardari personally promised would be built. The federal government allocated Rs41 million for its construction but, in fiscal year 2011, did not release any of those funds. For fiscal year 2012, the federal government has allocated Rs100 million for the project.

Another is the Omani-funded Gwadar Airport project, for which Muscat allocated Rs220 million but has yet to begin, despite over a decade having passed since Oman first made the offer. Chinese Prime Minister Wen Jiabao was unable to visit Gwadar on his visit to Pakistan in December 2010 because the runways at Gwadar’s current airport were too small to accommodate the Chinese leader’s plane.

However, The federal government has been providing assistance to Balochistan in other ways. Islamabad paid off Quetta’s Rs20 billion overdraft balance at the State Bank of Pakistan, saving the province billions in interest payments.

Under the multi-factor formula used by the NFC for awarding funds to provinces, Balochistan is entitled to 9.1% of the federal divisible pool that ends up with the provinces. While the province’s revenues under several categories, such as the gas development surcharge and natural gas royalties has declined, overall revenues have gone up as the province receives more money through other sources.

Yet the sense of deprivation continues to persist in Quetta and beyond, particularly when the federal government fails to deliver on projects that it has promised and allocated money for. Meanwhile, the province’s own revenue collection efforts remain abysmal, accounting for less than 3% of the total provincial budget for fiscal year 2011.



Published in The Express Tribune, June 19th, 2011.