It seems that the augmentation of provincial resources under the latest award of the National Finance Commission (NFC), has not augured well for the poor of Khyber-Pakhtunkhwa (KP). This is the stark message that comes across from the latest data on pro-poor expenditures related to the fiscal years 2009-10 and 2010-11. Khyber-Pakhtunkhwa is the only province experiencing an absolute decline in such expenditures — from a total of Rs108.5 billion to Rs103.7 billion. The province has borne the brunt of the war on terror. One would imagine that internal security would cost much more. That is why the new NFC award allowed the province one per cent of the net proceeds of divisible pool of taxes in addition to its share in terms of the new NFC formula. However, the expenditure on law and order actually declined from Rs19.1 billion to Rs17.8 billion.
The deepest cuts occurred in basic education. Expenditure on primary education was not even half of what it was in the previous year. It crashed from Rs15.2 billion to a mere Rs6.2 billion. The fate of secondary education was no different. Its expenditure plummeted from Rs16.3 billion to 8.9 billion. Basic health was the next big casualty. The expenditure on mother and child health was cut by half. Primary and preventive health facilities received 32 per cent less. There was a 10 per cent reduction in expenditure on the environment, water supply and sanitation. Rural development was also slashed by as much as 19 per cent. Only population planning increased by 12 per cent and that, too, mainly because the programme continues to be funded by the federal government.
So, where is the money going if not in the basics that matter to the poor? Mostly, it is the big-ticket items, even in a shrinking resource envelope. Roads and bridges topped the list, their expenditure rising from Rs8.9 billion to Rs13.1 billion. Tertiary facilities were preferred in education and health. General universities and colleges were given Rs5.4 billion over the earlier expenditure of Rs3.2 billion. Similarly, professional universities and colleges received Rs3.8 billion compared to Rs3.1 billion in the earlier year. General Hospitals located in urban areas were allowed to increase their spending from Rs8.8 billion to Rs9.8 billion. A saving grace is provided by the significant increase in the expenditure on agriculture, a pro-poor sector by all accounts. Expenditure on this sector increased from Rs8.4 to Rs12.2 billion. Also important, in this respect, was the increase of expenditure related to disasters from Rs4.4 billion to Rs6.5 billion.
The KP economy has been under intense stress from natural and man-made shocks. Already, the province consists of the least developed parts of the country. While attacks by militants adversely affect the business climate, the natural disasters — besides causing immense human suffering — have taken a big toll of its meagre capital assets, and these need repair and replacement. But the province had an enormous pre-existing social deficit, only made worse by natural disasters and militant attacks on schools and health facilities.
To apply such major cuts as in 2010-11 to the creation of non-tertiary social assets is an unwise policy in terms of equity as well as long-term growth.
Published in The Express Tribune, January 20th, 2012.